Disquiet, promise usher in New Year
Jan. 3, 2017
Going into 2017 grain-based foods executives likely are looking to the New Year with at least a measure of trepidation. The marked underperformance of shares of most consumer packaged goods companies on Wall Street in recent weeks reinforced the longer-running sense that fundamentals of the food business remain shaky. Other factors, including the latest salvos against sugar and sugar-sweetened products and the sub-optimal condition of the 2017 winter wheat crop, may only add to unease.
Still, it would be too easy to allow the industry’s many challenges to obscure some genuine and readily apparent positives. The largest U.S. bread and cookie/cracker companies — Grupo Bimbo and Mondelez International — are coming off notably strong years in 2016. And, as was recently noted on this page, the resurgence of Hostess Brands culminating with the company’s initial public offering powerfully demonstrates the industry’s resilience.
The U.S. economy’s building momentum and rising consumer confidence should offer cause for optimism as well. The possibility of a simpler corporate tax structure and lower overall tax rate add another potential plus for grain-based foods. The multi-year “bear market” in packaged foods sales at retail outlets, of course, is cause for continuing concern, but logic dictates this decline will not last forever. Here’s hoping that the turnaround is nigh!