NEW YORK — Marking its 12th advance in the last 13 years, the Grain-Based Foods Share Index closed 2021 in record territory, posting a double-digit gain. For a second consecutive year, though, the index lagged broader market indexes by a wide margin.
Calculated by Milling & Baking News based on the share price performance of companies with significant grain-based foods businesses, the Grain-Based Foods Share Index ended 2021 at 31687, up 3683 points, or 13.2%, from 28004 at the end of 2020. The advance was wider than the 3.7% gain in 2020 and compared with a 25% jump in 2019, an 11.8% drop in 2018 and gains of 0.7% in 2017 and 14.2% in 2016.
The 13.2% advance in the Grain-Based Foods Share Index lagged a broader market that showed historic strength in 2021. Closing up 26.9% for the year, the Standard & Poor’s 500 index hit record highs 70 times last year, or about a fourth of all trading days, the most in a quarter century. The Dow Jones average of industrial shares was up 18.7% in 2021 while the Nasdaq composite was up 21.4%.
The GBF Index gain of 13.2% was smaller than the 16.5% advance in the consumer staples sector of the S&P 500. Drilling deeper in the S&P consumer staples, the GBF was on par with food products sub-sector of the staples index, also up 13.2%, and compared with gains of 12.1% in beverages, 23.7% in food and staples retailing, 13.5% in household products, 41% in personal products, and 16.5% in tobacco.
In turn, the S&P consumer staples sector was the worst performing among the S&P 500 sectors, including communication services, up 21.7%; consumer discretionary, up 23.6%; energy, up 46.5%; financials, up 34.3%; health care, up 25.6%, industrials, up 20.1%; information technology, up 33.8%; materials, up 25.5%; real estate, up 44.3%; and utilities, up 15.8%.
Among the 22 companies in the Grain-Based Foods Share Index, 17 posted advances in 2021 and 5 sustained share price declines over the course of the year. Within the index, ingredient companies scored the widest gains with packaged foods companies generally lagging. Indeed, five of the six best performing companies in 2021 were ingredient companies. Only Hostess Brands, Inc., Kansas City, among the food companies broke the ranks of the top-five gainers last year.
The leading performer in the index in 2021 was MGP Ingredients, Inc., Atchison, Kan., up 81%. The strong gain ended a three-year skid for MGPI — down 3% in 2020, down 15% in 2019 and down 26% in 2018. The company’s shares were up 80% in 2017. After posting modest gains in fiscal 2020 net income from the year before, the company’s performance improved markedly in the first three quarters of fiscal 2021, with year-to-date earnings more than double a year earlier. After a strong second quarter, David J. Colo, the company’s president and chief executive officer, cited “record results across each of our business segments this quarter,” including both the company’s aged whisky business and its Ingredient Solutions segment.
Bunge Ltd., St. Louis, came in second among grain-based foods companies in 2021, jumping 42%. The wide gains last year followed a 14% advance in 2020 (when the company was the sixth best performer) and an 8% advance in 2019. In its most recent quarter, Bunge earnings were up 149% from a year earlier. During the year, the company announced it was selling its seven flour mills in Mexico, part of a strategic repositioning of Bunge’s business undertaken when Gregory A. Heckman became CEO three years ago. In a recent presentation, Mr. Heckman said Bunge has completed the “fix phase” of this repositioning and was set to embark on a growth phase, expanding its footprint and building out its capabilities.
Up 39% and ranking third in the index last year was Hostess Brands, Inc., Kansas City. The jump in share prices for the snack cake maker followed a 1% gain in 2020 and a 33% advance in 2019, the sixth best performance that year. Underpinning the strength in 2021 were a strong recovery in channels adversely affected by COVID-19 in 2020, such as convenience stores, and share gains in retail channels such as supermarkets. The company raised its financial guidance during the year, but year-to-date earnings in the first three quarters of the year were down 22% from the same period in 2020.
The fourth best performer in 2021 in the Grain-Based Foods Share Index was ADM, Chicago, up 34%. ADM was the tenth best performer in 2020, up 9%, and was 16th in 2019, up 13%. In a December presentation for the company’s global investor day, CEO Juan Luciano said, “We delivered on the commitments we laid out at our last investor day: building a better ADM, dampening volatility of earnings and cash flows, and expanding base earnings by almost 50% from $3 to our new normalized baseline of $4.50 per share.” The company is targeting earnings of $6 to $7 per share by 2025.
Seaboard Corp., Merriam, Kan., scored the fifth widest gains during 2021, up 30%. A year earlier, the company’s share tumbled 29%, the worst performer in the index. In 2019, Seaboard shares were up 18%. The company’s earnings were highly volatile through 2021, but, buoyed by an especially strong first half, were up dramatically in the first nine months of the year.
Rounding out the ingredient suppliers dominating the leadership of the Grain-Based Foods Share Index in 2021 was Ingredion, Inc., Westchester, Ill., up 23%. The jump in Ingredion’s share price represented a brisk rebound from the previous two years. The company’s shares were down 15% in 2020, when the company posted the fourth worst performance in the index, and were up 2% in 2019, also a sub-average performance. The company experienced earnings volatility through 2021 but basically saw positive trends. Even after a tough third quarter, the company raised the high side of its full-year earnings guidance. Specialty ingredients, which include starch-based texturizers, sweeteners and plant-based proteins, have climbed to 33% of total Ingredion sales, on track toward a management objective for the segment to account for 38% of sales by 2024.
Flowers Foods, Inc., Thomasville, Ga., was the seventh strongest performer in 2021, with a gain of 21%. Flowers shares were up 4% in 2020, when the company was in the “middle of the pack” among grain-based foods companies and up 18% in 2019, when Flowers ranked 13th in the index. During the year the company acquired the assets of Koffee Kup Bakery, Inc., a Burlington, Vt.-based baking company. In the first three quarters of the year the company’s net income was up 73% from the same period in 2020, though the earlier period included a large pension plan settlement and curtailment loss.
Shares of The J.M. Smucker Co., Orrville, Ohio, rose 18% in 2021, the eighth ranking company in the GBF index. Smucker shares were up 11% in 2020, the seventh strongest performer that year, and were up 11% in 2019 as well. Late in 2021, the company said it was selling to a private equity firm the R.W. Knudsen and TruRoots businesses. A year earlier, in December 2020, Smucker announced plans to sell its Natural Balance premium pet food business and, a few months before that, its Crisco baking ingredients business. Operationally, a highlight for the company during 2021 was the continued strength of its Uncrustables sandwich business, and the company set plans to spend $1 billion on a new Uncrustables production facility.
With a 17% advance, PepsiCo, Inc., Purchase, NY, ranked ninth in share price performance of companies with large grain-based foods businesses. PepsiCo’s stock price was up 9% in 2020 and 24% in 2019. During the year, the company’s Frito-Lay business said it would invest $200 million to add two manufacturing lines in Texas, $235 million on an expansion in Connecticut and that it would build a new plant in Poland at a cost of about $257 million. While PepsiCo’s profits were under pressure in its most recent quarter, sales for the period were up nearly 12%.
General Mills, Inc., Minneapolis, saw its share price climb 15% in 2021, rounding out the top 10 performers of the Grain-Based Foods Share Index. The advance compared with a 10% gain in 2020 and a 38% increase in 2019. In the first quarter of the company’s 2022 fiscal year, General Mills’ earnings were down 13%, and the company’s shares dipped briefly after the earnings announcement Dec. 20. The company celebrated steady market share gains (37 straight months), but Jeffrey L. Harmening, chairman and CEO, called the market environment “as dynamic and challenging as I’ve seen in my 27-plus years in the industry.” Earlier in the year the company announced plans for a corporate restructuring. While details were not offered, the company said the effort would be finished by the end of fiscal 2023 and would result in charges of between $170 million to $220 million.
Among company’s experiencing a setback in share prices during 2021, Bridgford Foods Corp. Anaheim, Calif., fell most sharply — 36%. Bridgford shares were down 27% in 2020 but were up 25% in 2019. In the nine months ended July 9, Bridgford sustained a loss of $1.7 million, versus profits of $5.4 million during the same period in 2020. The company is involved in the production and sale of frozen and snack food products across the United States. The company’s Snack Foods Products segment sustained a loss of $3.3 million in the first three quarters of the year while its Frozen Food Products business lost $243,000. Announcing third-quarter results, Bridgford said it has faced steep increases in flour prices and even steeper hikes in meat commodities. “Due to extremely high meat commodity costs, we currently do not expect that we will be profitable for the remainder of fiscal 2021 on a consolidated basis,” the company said.
Campbell Soup Co., Camden, NJ, had the second widest share price decline in 2021, down 10.2%. A year earlier the company’s share price fell 2% and in 2019, Campbell Soup was the third best performer, up 50%. Despite the lackluster performance in its most recent quarter, Campbell Soup said its Snacks business enjoyed strong demand. In addition to good results for its Pepperidge Farm product line, the company said several other brands gained market share, including Snack Factory Pretzel chips, Kettle brand potato chips and Cape Cod potato chips.
Shares of Lancaster Colony Corp., Westerville, Ohio, fell 10% in 2021 after gaining 15% in 2020 and falling 10% in 2019. Like several other companies, Lancaster earnings were under pressure during the year, even as the company generated double-digit gains in sales. In its first quarter ended Sept. 30, the company’s Foodservice segment experienced a 42% drop in operating income while sales rose 8%.
Also sustaining a share price setback in 2021 was Conagra Brands, Inc., Chicago, losing 6%. A year earlier Conagra shares rose 6%, and the year before that the stock price was up a whopping 60% (the second best performer in 2019, which followed a 43% drop in 2018). In the first quarter of the company’s fiscal 2022, Conagra’s net income was down 29% from a year earlier while net sales were down 1%. Net sales were still up 11% from fiscal 2020. The sales decline was attributed to divestitures, including Conagra’s Peter Pan brand acquired by Post Holdings, Inc. In July the company lowered its early fiscal 2022 guidance because of cost inflation.
The final company in the index to lose ground in 2021 was TreeHouse Foods, Inc., Oak Brook, Ill., down 4.6%. A year earlier TreeHouse shares were down 12% and in 2019 were down 4%. Following years of struggle in its attempts to find solid financial footing, the company in November announced it has initiated a strategic review that could involve the sale of all or part of the company. In June, TreeHouse sold its ready-to-eat cereal business to Post Holdings, Inc.
One company — Dunkin’ Brands Group, Inc. — was removed from the Grain-Based Foods Share Index in 2021. In December 2020, Inspire Brands, Inc. acquired Dunkin’ Brands for $11.3 billion.
In Mexico, shares of Grupo Bimbo SAB de CV closed at 62.96 pesos, up 46% from a year earlier.