NEW YORK — The negative outlook for the U.S. food industry has worsened during the past six months, according to Moody’s Investors Service.
The declining outlook is the result of concerns the global economic downturn may reduce demand for certain brand-named foods and slow U.S. meat exports to emerging markets.
"As consumers struggle with rising unemployment and an uncertain economy, they are bound to cut spending where possible," said Elaine Francolino, Moody’s vice-president and senior credit officer.
In addition, tight credit markets are intensifying problems for lower-rated packaged-food companies and especially for meat producers.
"Overall, the outlook for the food sector has grown more pessimistic as many commodities are still expensive on a historical basis and the economic downturn is likely to hurt operating products," Moody’s said. "Thus any relief from input price inflation — from lower crude-oil prices, for example — will probably only offset lower operating profits caused by the economic slowdown."