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.
“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]