NEW YORK — Share prices of grain-based foods companies fell in 2023, sustaining a 6.5% loss. While the overall decline was not severe, the sector’s performance relative to broader stock market benchmarks was among the worst in history.

Calculated by Milling & Baking News based on share price performance of companies with significant grain-based foods businesses, the Grain-Based Foods Share Index ended 2023 at 31811, down 2206 points, or 6.5%, from 34017 at the end of 2022. The loss followed a 7.4% gain in 2022, a 13.2% gain in 2021, a 3.7% gain in 2020, a jump of 25.4% in 2019 and an 11.8% loss in 2018.  

Major Wall Street indexes performed far better. The NASDAQ was the year’s biggest star, gaining 43%. The Dow Jones average of industrial shares closed with a 14% increase. 

The S&P 500’s performance landed between the two, closing with a 24% gain in 2023. Measured against the S&P 500, the GBF index’s performance deficit was gaping — 30.7 percentage points. The underperformance marked a reversal from 2022 when the GBF index beat the S&P 500 by 26.8 percentage points. The deficit in 2023, though, was the worst in 20 years, or since 2003, when the GBF index fell 4.9% and the S&P 500 gained 26.4%, for a 31.3 percentage point spread.

Grain-based foods shares were not alone underperforming the overall stock market in 2023. According to MarketWatch, 72% of all stocks underperformed the S&P 500 in 2023, which was buoyed by extraordinary gains by seven of the largest US technology companies, known as the “Magnificent Seven” — Apple Inc., up 48.2%; Microsoft Corp., up 57%; Alphabet Inc., up 58%; Amazon.com, Inc., up 81%; Nvidia Corp., up 239%; Meta Platforms, Inc., up 194%; and Tesla, Inc., up 102%.

The GBF index, with a 6.5% decline in 2023, underperformed all of the 11 S&P 500 index sectors except utilities, which fell 7.1%. The GBF index did worse than the consumer staples sector, which fell only 0.8%. It also fell shy of the 39.8% jump in consumer discretionary; a 0.6% drop in energy; a 12.2% gain in financials; a 12.4% gain in real estate; a 2.1% gain in health care; an 18.1% advance in industrials; a 12.5% rise in materials; a 56% surge in technology and a 53% jump in communication services.

Among the 25 companies in the Grain-Based Foods Share index, 4 posted gains in 2023. Among consumer packaged foods companies focused principally on supermarket sales, only one — Mondelez International, Inc. — eked out a share price gain in 2023.

A lengthy list of grain-based foods companies sustained share price erosion in 2023. Among those experiencing severe share setbacks in 2023, the stock price of Hain Celestial Group, Hoboken, NJ, fell most sharply, down 32%. In 2022, shares of Hain Celestial were the second worst performers among grain-based foods companies, plunging 62%. The year before, Hain posted a 6.1% share price gain. The company made numerous moves over the past year to counter challenges that included inflationary pressures, supply constraints and other headwinds. Wendy P. Davidson took over as president and chief executive officer on Jan. 1, 2023. In the months that followed, the company sold its Westbrae business to Bush Brothers, relocated its global headquarters to Hoboken and named a new chief financial officer. In October, the company announced a restructuring program dubbed “Hain Reimagined.”

Conagra Brands, Inc., Chicago, sustained a 26% setback in 2023, the second largest in the GBF index. The drop followed a 13% gain in 2022 and a 6% loss in 2021. Responding to what he called a national consumer trend with shoppers opting for cheaper, “essential” groceries, Sean M. Connolly, president and CEO, said this “short-term dynamic” has shoppers spending less on single-serve meals, particularly in the frozen category, for hands-on, cheaper food preparation. For the company’s 2023 fiscal year ending May 28, Conagra hit the company’s earnings and operating margin guidance but fell slightly short of its revised sales guidance for the year.

Sustaining a 24% share price drop last year, Campbell Soup Co., Camden, NJ, posted the third largest setback. The drop followed a 33% gain in 2022 and a 10% loss in 2021. A large part of the decline in 2023 was sustained June 5, when the company announced an 11% drop in quarterly soup sales and shares fell 9% in a day. Also during the year, the company said it was adversely affected by “transitory pressure,” particularly in the Meals & Beverage segments. Mark A. Clouse, president and CEO, said in August that in the face of economic uncertainty in 2023, consumer behavior became more cautious. This behavior was reflected in slower soup sales in the warmer months as consumers prioritized seasonal items and immediate needs, versus pantry restocking.

General Mills, Inc., Minneapolis, experienced a 22.3% setback in its share price in 2023, the fourth widest decline. In 2022, the company registered the fourth-highest advance on the GBFSI with a gain of 24%. Plagued by supply chain issues in 2022, the company experienced other challenges in 2023. In the second quarter of fiscal year 2024, net sales were down 2%, and the company lowered its sales guidance significantly and its earnings guidance modestly. Jeffrey L. Harmening, chairman and CEO, addressed General Mills soft forecast on Dec. 20.

“We’re seeing consumers continue to display stronger-than-anticipated value-seeking behaviors across our key markets, and this dynamic is delaying volume recovery in our categories,” he said. He said competitors that had struggled longer with supply chain issues recovered in 2023 and regained share faster than anticipated.

Ending a torrid streak of gains, ADM’s stock in 2023 was the fifth weakest among grain-based shares, dropping 22.2% in value. A year earlier, Chicago-based ADM shares topped the grain-based foods index, up 37%. Before that, ADM’s stock rose 34% in 2021, 9% in 2020 and 13% in 2019. During 2023, the company’s shares followed a roller-coaster course, falling early in the year, rallying at mid-year and then falling again. Pressure on crushing margins weighed on results and the company’s stock price in the first half of 2023. In October, shares fell to a 52-week low when results of the company’s Ag Services and Oilseeds segment fell short of expectations.

Flowers Foods, Inc., Thomasville, Ga., sustained a 21.7% loss in 2023, the sixth largest share price drop among grain-based foods companies. The decline represented a reversal from 2022, when Flowers gained 22%. Flowers’ shares fell steadily through the year, beginning with a February warning of high inflation and a potential recession. Three months later the company cut its financial guidance after a 7.3% drop in sales volume in the first quarter. The company sustained a loss of $46.7 million in the third quarter, which included $137 million in legal settlements and related costs.

Unlike the steady weakness in Flowers’ shares last year, a drop of 20% in shares of J.M Smucker Co., Orrville, Ohio, was largely tied to a single event — the company’s acquisition of Hostess Brands, Inc. The 20% drop was the seventh largest in the GBF index. Smucker shares were trading as high as $147.48 in late August, down 4% from the 2022 close. After the transaction, Smucker shares fell as low as $107.33, down 27% from the summer peak, before rallying in December. Smucker, which has a market capitalization of $13.7 billion, paid $5.6 billion to acquire Lenexa, Kan.-based Hostess, the maker of Twinkies, Ding Dongs and HoHos. Ten years earlier, Hostess had been purchased out of bankruptcy by investors for $410 million. The 20% drop in Smucker shares compared with a 17% gain in 2022 and 18% in 2021.

After rallying in 2022, TreeHouse Foods, Inc., Oak Brook, Ill., saw its shares lose ground again in 2023, falling 16%, the eighth worst performance in the group. TreeHouse’s stock was up 22% in 2022, the sixth best performance. But the company’s stock price fell 4.6% in 2021, 12% in 2020 and 4% in 2019. This past year, the company’s shares were flat to modestly higher through mid year before fading in August and beyond. While sales volume was soft in the second quarter, the company raised its guidance in August, projecting growth of 7.5% to 9.5% for the full year. Investors were skeptical, and three months later the company’s management reversed course and lowered its outlook for the year to growth of 4% to 5%. In September, the company announced a multiyear productivity plan.

The ninth widest setback in 2023 was sustained by Lancaster Colony Corp., Westerville, Ohio, with a 16% decline. For several years the company’s shares have lost ground in odd years — 10% in 2021 and 10% in 2019; and moved higher in even years — 19% in 2022, 15% in 2020 and 39% in 2018. This past year, Lancaster Colony shares slumped in late August after announcing weak fourth-quarter results. While the company’s management blamed weaker-than-expected results in the fourth quarter on “transitory costs associated with our long-term strategic investments in production capacity,” investors were not convinced a rebound was imminent. Shares fell 11% on Aug. 23 after the results were announced and treaded water the rest of the year.

The tenth steepest share price decline in 2023 was sustained by the tandem of Kellogg Co. and its successor business Kellanova, after the spinoff of WK Kellogg Co, all based in Battle Creek, Mich. In the nine months before the split, Kellogg shares were down 13%. Adjusted for a share distribution conducted in connection with the transaction, Kellanova shares were up 1% in the final three months of the year, and the two companies combined fell 11.5% for the full year.

The leading performer in the index in 2023 was J&J Snack Foods Corp., Mount Laurel, NJ, up 12% and one of only two companies to post a double-digit share price gain in 2023. By contrast, 14 companies enjoyed share price gains of 10% or more in 2022. The 12% advance of J&J that ranked first in 2023 would have been 12th best in 2022. J&J’s advance compared with a 5% decline for the company in 2022, a 2% gain in 2021 and a 16% drop in 2020. The company has relied on the continued recovery of away-from-home eating to fuel its rebound from the COVID-19 pandemic at venues such as movie theaters and sports arenas. The company saw “marked improvements” in unit volumes in the second quarter of 2023, led by strong performances in soft pretzels, churros, frozen novelties and frozen beverages. Net earnings in the year ended Sept. 30 were up 67% from the year before. Dippin’ Dots gave the company a boost. Acquired in 2022, Dippin’ Dots showcased “the best example of how we are executing product development and leveraging cross-selling opportunities,” said Daniel Fachner, president and CEO.

Ingredion, Inc., Westchester, Ill., came in second among grain-based foods companies in 2023, rising 11%. The gain this year followed a 1% advance in 2022 and 23% jump in 2021. As recently as mid-October, Ingredion shares were down 8% for the year but rebounded in the final two months of 2023. In its most recent quarter, Ingredion earnings were up 49% from a year earlier. In November, the company signed an agreement to divest its business in South Korea to an affiliate of the Sajo Group. James P. Zallie, president and CEO, detailed a plan to reorganize its business operations and to reformulate recipes to drive affordability.  The company saw growth in its largest specialty category, texture solutions, during the third quarter.

“Both our core and specialty ingredients continue to be well positioned to address large and growing end markets in the geographies where we operate,” Zallie said.  

Up 9% and ranking third in the index last year was Mondelez International, Inc., Chicago. The company built on gains in 2022 and 2021, of 1% and 13.4%, respectively. During the year the company closed on a deal made in late 2022 to sell its gum business to Perfetti Van Melle, the makers of Mentos, in a transaction worth $1.35 billion. Like Ingredion, Mondelez shares rebounded from an October trough, when the snack maker’s shares fell to $60.75, and then rallied 19% in the final months of the year. In the company’s third quarter, Mondelez generated strong growth in both dollar and unit sales with improved profitability. At the time, the company raised its sales and earnings guidance for the full year, fueling the share price rally.

The fourth-best performer in 2023 in the Grain-Based Foods Share Index was Bunge Ltd., St. Louis, with a 1% advance for the year. In 2022, the company posted a gain of 7% after a surge of 42% in 2021. Bunge’s shares weakened early in the year when first-quarter earnings were down from the year before but moved higher after the company released second-quarter results showing a 23% earnings gain. It also reached an agreement to combine with Viterra, a Canadian agribusiness, to broaden its global agribusiness operation. While third-quarter earnings were weak, Bunge raised its earnings guidance for the year, and share prices moved higher in response.

New to the Grain-Based Foods Share Index in 2023 were Kellanova, the successor business to Kellogg Co., and WK Kellogg Co, a spinoff from Kellogg. One company was deleted from the GBF index in 2023 — Hostess Brands, Inc., acquired by The J.M. Smucker Co. on Sept. 11.

Shares of Grupo Bimbo SAB de CV, Mexico City, which owns the largest commercial baking business in the United States, closed 4% higher than a year ago. Bimbo announced plans to spend up to $2 billion on capital expenditures this year, up 67% from in 2022.  In late October, the company announced the acquisition of Mile Hi Bakery in Colorado and weak sales results in the company’s third quarter. On a positive note, Bimbo said the rate of sales volume decrease was slowing sequentially.