Editor's Plate: Consumer Optimism High

March 31, 2008
Our own readers’ survey and comments at the CAGNY meeting indicate optimism.

These are tough economic times, as I say in our cover story on our Readers’ Choice Awards, but processors appear to be getting exceptionally good help from their vendors. Suppliers of equipment, ingredients and services appear to be bending over backwards, providing exemplary customer service, product innovation, even competitive pricing.

At least that’s what the comments to our Readers’ Choice survey indicate. Despite the fact our inquiry is a good opportunity for you out there to complain, favorable comments outnumbered the bad ones by about five to one. Moreover, there were numerous interesting observations about changes in the business. “Ingredient suppliers are getting more involved in R&D,” says a Latin American food processor who reads our digital edition. A guy at a ConAgra subsidiary had an interesting take on how to spot a quality ingredient supplier: ”I can usually tell if I will be getting good service and quality products if I can easily obtain up-to-date kosher and organic certification. Companies that stay on top of these certifications usually have very good quality programs.”

“I think information is almost as important as the product in today's world,” wrote a product developer at a salad dressing firm. “Those companies that have the systems in place to rapidly provide the necessary info are more valued.” Adds another ingredient buyer: “The more complicated the use of the ingredient, the more critical technical support is to the relationship.” I wish we had room for all the comments (there were more than 100 of them). Many more will be in the web-based version of that story. Our thanks go to the many people who took the extra time to share valuable insights with us, and also to the hundreds of readers who answered the survey, making this a significant source of collective wisdom for any of you looking for a new supplier of equipment or ingredients. 

Rampant optimism at CAGNY

Also worth noting is the widespread optimism – backed up by raised earnings guidances – by food processing executives who attended the annual Consumer Analyst Group of New York meeting in February.

It’s kind of a Valentine dance, this annual affair between the heads of consumer goods companies and the Wall Street guys. A couple of days at a warm-weather resort gives the financial analysts a great chance to get to know these companies and their highest-level execs.

All the hugs and handshakes aside, the food execs are still on the record for a realistic assessment of how the year will shake out. Despite the usual talk of raw material and energy costs, product price increases and private label competition, the food executives shared unabashed optimism that they were well positioned for the trials and tribulations 2008 seems destined to hold. And I expected the worst.

Anheuser-Busch, General Mills and ConAgra raised earnings projections, while Kraft and PepsiCo stood by earlier, aggressive predictions. Kraft appears to be firing on all cylinders again. Even ConAgra is talking optimistically. Despite those two expensive recalls last year (peanut butter and pot pies), CEO Gary Rodkin predicted sales growth exceeding 4 percent in the near- and short-term and future annual EPS growth of 8-10 percent.

Rodkin repeatedly called his company “the new ConAgra Foods.” He said it would beat third-quarter and second-half estimates of diluted EPS from continuing operations (although estimates were only 70 cents for the second half ending May 31).

“There are not many companies that have gone through the gauntlet the way we did in the last year,” he said. “We have learned a lot. We are a lot smarter, we are a lot stronger, and we are better equipped for the road ahead.”

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