Food Biz Still Cooking

After Kraft's and Sara Lee's recent disappointing results, it may have appeared that even food companies can't escape the recession.

But a look at the earnings reports of several food companies this week shows that Kraft's and Sara Lee's problems are mainly internal. For the most part, the food business is, as usual, recession-resistant.

That's not to say that the news is all good. Campbell Soup's total sales were off by 4 percent, and revenues were down 14 percent. But much of that had to do with the effect of a strengthening dollar on global sales—U.S. soup sales were up 8 percent (canned soup being a recession staple), and the company forecast that for fiscal 2009, earnings growth would come in at the high end of its 5 percent to 7 percent range.

H.J. Heinz reported an 11 percent rise in its net as it continued to be able to pass along price increases to consumers. The company noted that "pantry deloading"—that is, consumers digging around in the backs of their cabinets rather than making shopping trips—crimped sales a bit, but that trend was countered by people increasingly eating pasta meals at home and buying Heinz sauces.

J.M. Smucker's net leaped by 84 percent, thanks largely to its acquisition of Folger's coffee from Procter & Gambel. But it also has been able to keep prices up on its jams, peanut butter, and packaged foods. The company did lower its forecast for fiscal 2009, saying that the peanut-butter scare will hurt it, even though its Jif brand was not part of the recall.

Del Monte Foods raised its guidance for the year as its profits jumped by 14 percent. Again, higher retail prices helped.

Del Monte's cousin Del Monte Fresh Produce didn't fare as well. It was hurt by the need to lower its prices to attract shoppers to its fresh fruits and vegetables, even as costs continued to rise. Profits were down 33 percent, and sales were off by 2 percent. But that was still better than analysts were expecting, and sales of bananas—a "value" food—were up 18 percent.