SAN FRANCISCO (MarketWatch) — U.S. brand-name food makers raised prices throughout 2011 and it’s starting to catch up to them.
On Friday, General Mills GIS
+0.37% blamed “weak volume performance across U.S.
retail food categories in December and January” for cutting their fiscal May 2012 outlook to between $2.53 and $2.55 a share from $2.59 to $2.61.
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Heinz sales pumped by emerging markets
Stocks editor Paul Vigna joins the News Hub to review key earnings reports from Heinz and General Mills. He also looks at January's consumer price figures. AP Photo/Don Ryan
Lately, General Mills and other brand-name food makers have faced softening consumer demand, calling into question exactly how financially strong the U.S. consumer really is despite rising employment numbers.
General Mills didn’t single out any particular brand in its statement, but it means shoppers haven’t been buying enough of its packaged foods.
“In their top five U.S. categories, General Mills continues to see strength from Nature Valley snack bars, but recent weakness, namely in yogurt, should have led to the guidance cut,” said Consumer Edge Research analyst Rob Dickerson, who in recent months has been skeptical of the company’s profit potential for this year and 2013.
Dickerson said General Mills’ Yoplait yogurt volumes fell 24% from Dec. 26 to Jan. 22, based on data collected from U.S. food, drug, mass retailers and convenience stores.
General Mills
And when it comes to Greek yogurt, he noted that General Mills is not well-exposed to shoppers in the northeast U.S., who are big consumers of that particular style.
For all its food categories, General Mills has raised prices by 8.1% over the last 52-weeks in tracked-channels, while volume has fallen 8%, Dickerson said. This suggests General Mills needs to cut prices or increase advertising to whet consumers appetites.
General Mills shares fell 4% to $38.17 Friday afternoon, making it one of the biggest percentage decliners on the S&P 500 SPX
+0.23% .
General Mills is yet another sign brand-name American food makers continue to fight an uphill battle to win over U.S. shoppers, who have been very price conscious during this period of stagnant wage growth. Shoppers have been enamored with cheaper store-brand foods.
Campbell Soup CPB
-0.55% , which Friday beat Wall Street’s profit view for its quarter
ended Jan. 29, said shoppers pulled back on food purchases following the winter holidays.
“Within the U.S. grocery trade, this past quarter’s dollar consumptions softened dramatically, particularly in the last four weeks of the quarter,” Campbell Chief Executive Denise Morrison said on a conference call.
According to J.M. Smucker CEO Richard Smucker, the overall volume of food and beverage sold at retailers measured by IRI dropped 4% year-over-year for the 12-week period ended Jan. 22, reaching a five-year low.
In its Thursday earnings report, Smucker SJM
+2.05% said volumes fell 10% for its
quarter ended Jan. 31 as shoppers bought less Crisco cooking oils, Folgers coffee and Jif peanut butter.
Smucker’s retail prices for its entire food portfolio were 16% higher than the same 2010 period as it sought to blunt surging prices for unroasted green coffee beans, peanuts, sugars and cooking oils.
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On Friday, H.J. Heinz HNZ
+4.49% also highlighted the mindset of U.S. consumers.
While reporting strong sales for its namesake ketchup in emerging economies like China and Russia, Heinz said volumes fell 2% in North America after it raised prices for ketchup, Ore-Ida frozen french fries and Classico pasta sauces.
The prices seemed so high in cost to me. The shelves were mostly empty too by this time..2PM on a Sunday. I have been stopping in at our local Aldi's and then hit the sale items at a Wegman's. Sometimes the Dollar General store will have some good buys on paper products too. I don't know how people are or will buy necessary foods if prices get any higher. 
