Tuesday, February 21, 2012

The Lies We Tell Ourselves (Part 2): Price Hikes Catch Up to U.S. Food Makers

Continuing on with the theme from this morning's post, the problem with repeatedly lying to yourself is that sooner or later reality comes along and rubs your fucking nose in it. As I pointed out in part one of this post, the mainstream media narrative of economic recovery is based primarily on two statistics, stocks and jobs, both of which are being blatantly manipulated. The funny thing is how when other factoids emerge that don't follow the party line, the business reporters stenographers are stil left cluelessly scratching their heads. For instance, check out this story about the declining profit margins in the food industry that appeared late last week on MarketWatch:
On Friday, General Mills 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.
Really? But I thought the economy was getting better. Tell me more.
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.
You see, this is what happens when the government arbitrarily casts workers out of the employment statistics after they become permanently unemployed. Everyone then gets all excited about an official unemployment rate that appears to be dropping when in fact all we have managed to do is create a massive structural unemployment. In addition, most new jobs that have been created pay for shit and have little in the way of benefits. Thus consumers who either aren't getting paid at all anymore, or are getting paid much less than they used to stop buying unnecessary but expensive grocery items like fucking yogurt. That this obvious fact is being completely ignored makes me want to slap the shit out whomever writes such drivel.

Oh, but hey, at least inflation is under control...so sez the government. That's something, right?

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.
And wrong again:
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.
And, oh what the fuck, three strikes and you're out:
Heinz said volumes fell 2% in North America after it raised prices for ketchup, Ore-Ida frozen french fries and Classico pasta sauces.
Love that bit of laughable advice the reporter gives to General Mills. The company can't cut prices because of rising commodities costs, and increased advertising will have no effect on people who have no money to spend and have exhausted all of their credit.

All of this absurdity, of course, would be laughable were the implications not so dire.

Bonus: "From the promise that healed us...to the lies that I said. Oh, it's a strange day..in such a lonely way"


  1. Good post Bill, as you say the economic figures are being blatantly manipulated. And the mainstream media stooges just report the rubbish that Governments are pumping out.

    Here is an example from the Irish edition of the Sunday Times recently "Falling inflation is a welcome relief for household budgets, but living costs will continue to rise". Inflation is falling but the cost of living is rising, simple stuff, just take out all the things that are rising in price like energy and food and hey presto inflation is falling. Imagine intelligent people waste their lives writing this kind of crap for a living.

    1. Not only does that kind of reporting mislead the masses, it also screws up the thinking of the stenographers, lobbyists, etc. who make a career of spewing out all of it.

      There is so much to be said for living honestly, and the good news is it appears it still can be done and keep a roof overhead.

  2. I hope at least part of the lost business by these agri-companies is that people are shopping locally. A lot of blogs are about shopping locally and I hope people are listening.

    1. I haven't written about it, but I'm one of those local shoppers. There are now two specialty local markets and a regular Saturday morning farmer's market within a very short drive of my place. Rarely do the wife and I buy veggies or dairy products at the supermarket anymore. :)

    2. Same here, Bill. The big catch, though, is that our town only has one real farm for veggies & the like, plus two that do meat. We desperately need to get people back to growing for themselves, since there's NO way our town can support itself food-wise when fuel costs kill off the trucking industry. Maybe it's a good thing we've got so many unemployed folks -- they can start farming, if we can get them away from the TV!

  3. Man, you are on fire! Great stuff today. In a horrifying, train-crash sort of way, of course...