Friday, February 27, 2009

Recession Hits Food Part 2

The month to month comparison for Food (retail and restaurant) doubled its decline in the fourth quarter down 152 basis points Vs the 75 bpts decline in the third quarter.

What should we make of this?

The initial headlines have been the same this quarter as the third quarter... close to panic.

But again you have to say that it has been a roller coaster of a year with input and transportation costs cycling high in the first six months then sharply declining in the balance of the year. And these costs have declined, the ability of food businesses to pass along these savings has increased.

Now, there are some big tectonic changes underway. Declines in premium foods, expensive restaurants, increases in couponing and private label. But the biggest news to me is that on a full year basis, there was only a 2% decline Vs 2007.

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