Grocery prices are rising as eat-at-home demand soars during the coronavirus pandemic | SJM Message Board Posts

J. M. Smucker Company

  SJM website
  • Membership Drive Update: In the first 48 hours we've hit almost 20% of our goal. An encouraging start to be sure, but we can't stop now. We need to pull enough subscription revenue forward to counter severe cash flow deficits resulting from a dramatic slow-down in ad spend thanks to the global pandemic which shows no signs of letting up in the near-term. We're doing everything in our power to keep our heads above some very choppy water, but we can't do it alone. We need your help. So if you've ever thought about giving our premium service a try, there's no better time to do it than right now by taking advantage of one of our discounted multi-year plans. Thanks in advance for your continued loyalty & support! 

  • Limited Premium Membership Offer
    Choose a Plan, Save Money & Help Us Survive the Pandemic

    Lifetime @ $399 (only 24 left)  5-yrs @ $199 (only 31 left)  2-yrs @ $99 (only 29 left)

SJM   /  Message Board  /  Read Message

 

 






Keyword
Subject
Between
and
Rec'd By
Authored By
Minimum Recs
  
Previous Message  Next Message   Post Message   Post a Reply return to message boardtop of board
Msg  36 of 46  at  4/7/2020 4:30:24 PM  by

jerrykrause


Grocery prices are rising as eat-at-home demand soars during the coronavirus pandemic

 

MarketWatch

Grocery prices are rising as eat-at-home demand soars during the coronavirus pandemic

Smucker’s and Conagra say the number of promotions will decline in the coming months

By

reporter covering retail and consumer-oriented companies

 

JPMorgan says food companies have started to talk about reducing the number of promotions they offer, and Mondelez International Inc., Kellogg Co. and plenty of other businesses stand to benefit.

With people across the U.S. staying home more, diners are eating in, sending flocks of shoppers to retailers like Kroger Co. KR, -2.36% , Costco Wholesale Corp. COST, -0.48% , Walmart Inc. WMT, -3.23% and others.

Though shoppers may be done with their initial stockpiling, which sent sales of grocery and household necessities soaring in March, analysts say they’ll likely maintain shopping activity to replenish essential items.

BMO Equity Research data shows that grocery sales grew 83% for the two weeks ending March 22. Sales were up a whopping 89% for the week ending March 15 and up 77% for the week ending March 22.

In a note published Friday, JPMorgan analysts said 22% of food on store shelves is discounted, according to the companies under its coverage, and the average discount is 23%. Retail sales would increase 5% if all discounts went away.

“In a normal environment, reduced discounts — that is, higher prices — would lead to lower volumes, but we are not in normal times,” JPMorgan said. “We think elasticity will be minimal as long as food-at-home is benefiting from COVID-19 to this degree.”

Analysts noted that J.M. Smucker Co. SJM, -1.13% has already announced that it will be cutting discounts, saying in a March 19 letter to retailers that terminating promotions scheduled to start between April 17 and Nov. 30 is one of the measures it’s taking to deal with the coronavirus pandemic.

Conagra Brands Inc. CAG, -2.71% has said it’s working with its retail customers on cutting discounts as well.

“What I would tell you on promotions right now is, we’re honoring all the contracts we have in place,” said Conagra Chief Executive Sean Connolly on the company’s third-quarter earnings call on March 31, according to a FactSet transcript.

“But the tactical dynamic is that we’re in daily discussions with our customers on how to help them meet the needs of their shoppers. And many customers are looking to pull back on promotions as they try to manage the basics of just keeping their shelves stocked.”

In addition to Mondelez and Kellogg, JPMorgan said Kraft Heinz Co. KHC, +2.70% , Campbell Soup Co. CPB, -1.82% and Kroger will be among the companies that gain the most from reducing discounts.

“Over the last four- and two-week periods, the percentage of food-at-products sold on deal has started to decline year-over-year,” the analysts wrote.

Grocers aren’t the only ones cutting promotions to keep shoppers from rushing the shelves. Home Depot Inc. HD, +0.50% said it has canceled all major spring promotions to keep from driving traffic to its stores, part of its social-distancing efforts.

S&P Global Ratings also identifies certain categories, like shelf-stable foods and household cleaners, as well-positioned for the coronavirus pandemic and volatile capital markets.

“The initial spike in demand from pantry-loading and consumers replenishing at a rapid rate because of the shift to at-home consumption gives manufacturers of staple items an advantage,” S&P said.

The Consumer Staples Select Sector SPDR ETF XLP, -1.15% has gained 2.6% over the past year, while the SPDR S&P Retail ETF XRT, +2.61% has plunged 32.2% and the S&P 500 index SPX, -0.16% has dropped nearly 7% for the period.



     e-mail to a friend      printer-friendly     add to library      
| More
Recs: 0     Views: 22
Previous Message  Next Message   Post Message   Post a Reply return to message boardtop of board






Financial Market Data provided by
.


Loading...