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Daily Pulse

Wheat up, Wheaties down

Joel Patterson Dec 20, 2011

The Pulse is down today, but not because we aren’t eating our Wheaties. We are — and our Yoplait. But food commodity prices are up, and that’s hurting General Mills’ profits.

Despite stronger-than-expected revenues, the company’s stock fell nearly 2 percent today on news that rising costs of everything from ingredients to labor are eating into its profits. The price of wheat, corn, oats and soybeans have been up this year as less-predictable world weather patterns make crops of staple foods less reliable and therefore more expensive.

To make matters worse, consumers looking to stretch shrinking paychecks further have created a price war on Aisle 14. “Price competition has been particularly acute in the cereal aisles, where discounts got so bad that at one point this summer, brand-name cereals were selling at the same price as store brands,” wrote the Wall Street Journal’s Marketwatch.com.

But don’t weep for manufacturers. General Mills has already passed costs on to their customers in the form of higher prices for all the foods it produces. Kind of makes you rethink the whole “Breakfast of Champions” thing.

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