2008: Food and Beverage Industry Fared Better Than Most

It’s been a pretty lousy year for food and beverage industries, in absolute terms. Food company stocks dropped 27 percent, and beverage stocks dropped 21 percent. But if you step back and take a bigger-picture view, food and beverage companies are actually in pretty good shape, compared with the rest of the market.

The sinking economy sent more consumers to grocery stores, where private label brands did particularly well. And even some of the cheaper restaurants, such as McDonald’s, were able to profit from the economic gloom and doom.

Furthermore, a recent report suggests that as gas prices fall, one of the first places consumers spend that extra cash is at the grocery store.

Of course, it wasn’t just decreased consumer spending that sent profits spiraling downwards — input costs were also up until the beginning of fall. Hedging decisions on currency and commodities had huge impacts on company profits, and a lot of companies cut jobs, raised prices, or shrank portion sizes to increase their margins.

Most restaurants didn’t fare too well, and pricier grocery brands lost out to store brands, perhaps permanently. But compared to the economy as a whole, the food industry didn’t do too badly. After all, the basic facts of life and death are on its side — people will always need to eat.