Management reported continued pressure across its retail footprint (primarily in its Minneapolis-St. Paul market) due in large part to tightening consumer demand, reductions in government support programs, and more intense price competition from the discounters.
Sysco Corp. reported that its business is performing well although investors are concerned about slowing restaurant traffic. In any case, Sysco expects positive volume growth this year although traffic will be muted vs. historical levels.
Lots of things are going on in ag production, from carbon capture to the huge potential for fiber-based pre/postbiotics. Also, for the first time in 20 – 30 years, the discussions have changed from the price of grains to the methods used to raise or create the product and how much is available.
PFG reported that QSR is currently outperforming casual & family dining, driven by consumer trade-down. Foodservice costs deflated -1.2% y/y during the quarter while Vistar’s inflation (vending machine) remained elevated at +13% y/y with the convenience segment dropping below +10% for the first time since 4Q22.
Modest y/y product cost deflation was driven by center-of-the-plate categories despite slight grocery inflation. +5% growth in independent restaurant cases and +7% growth in both healthcare & hospitality was offset by a -4% chain restaurant decline (reflecting weak traffic).
Tyson’s 2Q23 results show the ongoing challenge in protein production, with supply constraints squeezed by elevated input costs. Tyson’s prospects are important to monitor as it relates to going forward food costs (and protein prices in particular).
Sysco reported rapid disinflation during fiscal 2H23, including deflation within its core U.S. Broadline business towards the end of fiscal 4Q. Sysco expects that deflation will continue within U.S. Broadline during fiscal 1H24.
Mondelez reports that consumer price sensitivity seems to be plateauing with strength observed among Latin American consumers who were able to absorb substantial price increases. Notably, promo prices are increasing faster than non-promo prices in percentage terms.
Consumers have been buying fewer items overall as they hunker down as opposed to trading down. While Conagra’s pricing peaked last quarter, it remains +17% higher than last year as the company has worked to offset its own food cost inflation. While price elasticity softened during the recent quarter, it remains well below historical norms.
Consumers are shopping in more stores than before, looking for better deals. They’re buying more in Dollar stores & in shopping clubs and buying more in mass. Every consumer segment is adjusting.
