Hormel Making Lots Of Money By Not Lowering Prices?

Remember last year when all the food manufacturers were raising prices and shrinking portions because the cost of raw materials had risen dramatically? Now that costs are down, they’re reluctant to lower prices. It’s a good time to be in the food business.

From Reuters:

“Prices are still high, costs are down, so overall performance has been pretty good,” said Christopher Shanahan, analyst with Frost & Sullivan.

Food companies raised prices last year when costs for feed grains and other input items sped higher. Now, prices for many of those inputs, particularly feed grains, have moved back down, which has helped companies like Hormel, he said.

Sales of Hormel’s signature Spam and Dinty Moore brands remained strong as shoppers sought value amid the weak economy. In addition, sales improved for some convenience items such microwaveable meals, the company said.

Hey, at least someone is making money. And let’s face it… you didn’t really expect them to lower prices once costs went down... did you?

UPDATE 3-Hormel serves up strong Spam sales, profits [Reuters]
(Photo:catastrophe girl)

Comments

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  1. Paul E. Dykes says:

    Competition is supposed to keep the prices down, but in a lot of cases, it simply doesn’t work. If companies get together and talk about artifically inflating prices, it’s illegal. If they do it without talking about, or getting caught talking about it, it’s capitalism.

  2. SkokieGuy says:

    Spam – Any resemblance to actual meat is purely coincidnetal.

  3. shepd says:

    Of *course* cheap food is going to be popular, even if the cheap food is more expensive then it should be.

    The companies who are hurting right now (I expect) are the ones with expensive food, like specialty products and organics.

    Personally, I think it sucks because I’m a cheap fooder and now everything costs me at least 20% more then last year.

    • edwardso says:

      @shepd: I think organic prices have held pretty steady. I haven’t noticed a dramatic increase. I have seen some conventional produce the same price as organic on a few occasions

    • qwickone says:

      @shepd: Um, spam isn’t cheap. At least not at the Giant where I shop. It’s often more expensive than chicken in the freezer aisle (lb for lb).

      • catastrophegirl chooses not to fly says:

        @qwickone: yeah, i have a whole collection of pictures of spam – some of them show shelf tags too. but as you can see – spam’s gettin’ fancy! and costs more than ever. [no, i don't eat it, i just photograph it]

  4. Illusio26 says:

    Sales of Spam remain strong? What the hell is wrong with people?

  5. mac-phisto says:

    actually, i feel this is an integral part of our recovery. if transportation costs can stay low this summer, i think a lot of companies are going to exceed their projections. that increased profit should translate into jobs before the end of the year or early next year.

    • DerangedRoleModel says:

      @mac-phisto: No it won’t, they’ll just find ways to cut corners even more :P

    • Coles_Law says:

      @mac-phisto: Good point. Hopefully we won’t see another spike in prices if transportation costs rise-assuming they stay below last year’s highs, there shouldn’t be a need to raise prices.

      On an unrelated note, nice avatar. Castle Crashers is awesome.

  6. coolkiwilivin says:

    SPAM is awesome. American’s need to get over their squeamishness about meat. People have been eating other parts of the animal for a very long time. I grew up eating tripe and didn’t realize it was a gross out food for americans until later on in life. Both French and Chinese cooking are known for not letting a single scrap of animal go to waste. Check out Tete de Veau, a classic french dish or on the chinese side Chicken Feet at a Dim Sum/Yum Char restaurant. Seriously people Spam is not that big of a deal.

  7. mbz32190 says:

    I don’t understand why people are buying SPAM to eat immidiately..it may be good to have a few in a “crisis kit”, but SPAM is fairly expensive for what it is. You can easily buy real meat for the same price (even if you have to wait until the market marks down close-dated packs)

    • narf says:

      @mbz32190: There are many folks who are scared of touching raw meat, let alone having any sense of properly cooking it. Chicken and pork can be easily overcooked to the extent that it’s like eating leather.

      Hence the popularity of prepackaged, “heat-and-eat”, and convenience foods, whether as the meal or as a significant ingredient for it.

  8. Trey Mahaffey says:

    this is the driving force behind me buying as much publix brand goods as i find that is an alternative for what i have been buying.

    publix has been doing me good lately… 2.89 for a gallon of milk is just one example (and they started that when the prices went through the roof last year)

    i am in florida where publix has their headquarters so i dont know if the rest of the states that has publix has these kind of deals.

  9. johnfrombrooklyn says:

    How can you say Spam is expensive? It’s 2 bucks for a tin at almost any grocery store. And you can’t eat more than 1/2 tin anyway. At most. I love Spam. 2 years living in Hawaii taught me to appreciate it. And the main ingredient is potato starch.

  10. twophrasebark says:

    I ate spam once.

  11. Triterion says:

    What happened to deflation? Can I get some of that please?

  12. Michael Belisle says:

    Why would they lower prices? Demand is high, which suggests that the market is willing to pay the current price. After last year when it was a bad year to be in the food business, they deserve (and need) a good year.

    Two good years might be pushing it if it gets to that.

  13. chris_d says:

  14. Phil Keeps It Real [Consumerist] says:

    SPAM is an acronym: Special Processed American Meat.

    OR

    Slimy Processed Anemic Mucus

  15. Micromegas says:

    I know being elitist about food is a popular trend nowadays, but seriously, who can bash SPAM? It’s so damn delicious.

  16. superhumanben says:

    This happened a couple of years ago when fruit and veggie prices spiked. Then the next harvest time came and prices remained as insanely high. Tis the way of things…

    What was it that the movie Wallstreet said? Greed, for lack of a better word, is good…

  17. JGKojak says:

    If you removed all ag. subsidies SPAM would NOT be so cheap.

  18. MooseOfReason says:

    I’d say they’re being smart. I heard the price of oil was going up. That would put the squeeze on Hormel’s Spam. ;)

  19. turkeyspam says:

    I’m not much for regular spam, but the bacon is good, and obviously by my name, you should be able to tell which flavor I like the most.

  20. fatcop says:

    Treet demands representation!