Money Out the Wazoo

‘Tis the season; earnings and Super Bowl season, that is. The most influential voices in food production focused on the pecuniary … and the pig skin.

• Food prices: beef up, wings down
• Earnings: burritos up, farms down
• Super Bowl ads: thumbs up, thumbs down

Special Feature: Bader Rutter’s Super Bowl advertising pundit Dennis Ryan focuses on the food and bev spots in Sunday’s “big game.”

“People are waiting for prices to return to what they call ‘normal’ — and with the exception of a few things, like eggs — we’re not going to see that. We’re going to see prices stabilize, and that’s likely it.”

—Dawn Thilmany, agricultural economist, Colorado State University (The Washington Post)

Chicanery in Aisle 3

As far as universal experiences go, enjoying food is closely followed by being upset by its cost. While food price inflation has slowed, four years of hikes means that Americans are paying nearly 25% more now than before the COVID-19 pandemic.

• The Washington Post outlined an economic paradox in the United States: inflation has fallen, but grocery prices remain “stubbornly high.” The article cited Ipsos poll data that found two-thirds of Americans consider food price inflation the most oppressive form of inflation.
• Pegging the issue as a target for his reelection campaign, President Biden called on grocers to lower prices (Reuters). Jared Bernstein, the chair of Biden’s Council of Economic Advisers, explained: “If you’re a company whose input prices have come down and you’re not passing those savings along to the consumer, he will call you out.”
• FMI CEO Leslie Sarasin countered: “We welcome and encourage a national discussion about food prices and our food supply chain, but such a discussion must be informed by data rather than politics.”
• Successful Farming covered beef prices as a contributing factor. Between high demand and producers rebuilding herds, steak prices are projected to stay high for at least a year.
• Agriculture Dive reminded everyone that avian influenza remains a threat to egg prices, with the latest outbreak killing 2 million birds in California.
• For a case study of inflation’s impact, The New York Times’s Stefanos Chen examined how a street vendor’s chicken over rice jumped from $6 in 2020 to $10 today.
• “Supermarket guru” Phil Lempert looked at how Super Bowl parties will be affected. Good news: wing prices are down 5% to 11% from last year.

Our Takeaway: President Biden chiding the grocery industry carries more political weight than regulatory force. Price increases have mostly stemmed from higher input costs and labor shortages across the supply chain. These problems are unlikely to be solved by any specific policies, so “naming and shaming” might be the most effective tool Biden has to lower food costs.

Burritos Up, Farms Down

The most recent round of earnings reports revealed some interesting market trends, including the negative effect war can have on international foodservice brands, a couple yellow flags for beef consumption, and a potential huge blow for 2024 farm income. McDonald’s February 5 call prompted several angles of coverage, including chicken matching beef sales at the “burger giant” (Meatingplace), competition for low-income customers (Food Business News) and slow sales in the Middle East on account of the Israel-Hamas conflict (The Wall Street Journal). Other notable earnings reports from around the food system:

• Amazon ‘pleased with progress’ in grocery | Progressive Grocer
• Corteva earnings beat expectations, company optimistic on farm economy | Agri-Pulse
• Tyson reports earnings beat expectations, but high beef prices stress its consumers | Reuters
• Israel-Palestine conflict-related boycotts put a dent in Starbucks’ Q1 results | Nation’s Restaurant News
• Starbucks earnings warning: boycotts can hurt business | Bloomberg
• Chipotle stock rallies to record highs on earnings, ends streak of slowing growth | Investor’s Business Daily
• USDA Expects Farm Profits to Fall 25% in 2024 | Progressive Farmer

Our Takeaway: It’s hard to balance consumer costs with the impacts of war. 

The Plated Super Bowl Food and Bev Ad Preview

Super Bowl weekend is a massive food and beverage occasion (1.45 billion chicken wings, anyone?). Here is how five brands will spend their $7M on 30 seconds. 

Hellmann’s looks to have a winner with “Mayo Cat,” starring the always-inventive Kate McKinnon. After her cat says “Mayo,” it becomes a global sensation, even dating and dumping Pete Davidson. This epic consumer packaged goods ad still grounds the insanity in a brand-relevant moment. Impressive. 

Uber Eats creates a crowd-pleasing ad around a simple premise and a cavalcade of celebrity appearances. It builds to a signature moment between Jennifer Aniston and David Schwimmer, though Jelly Roll rather amiably steals the show. 

Lots of beer brands will show up. Coors’ “Chill Train” returns and, mystifyingly, casts LL Cool J as the conductor; cold beer is wonderful, but this is just silly. Remarkably, Bud Light returns to form with “Genie,” which is stupid in the best way and even manages a few surprises.

Among the overblown (and simply okay) ads, the only real miss feels like Starry with “Love Triangle,” which stars Ice Spice in a clumsily low rent execution. Someone tell the brand this ain’t TikTok.