Thursday, May 3, 2018

The Disaster That Is American Packaged Food (K; GIS)

Not talking nutrition here, just shareholder wealth destruction.
We've been posting on the profit potential on the short side for the last couple years and things have only gotten worse for the former giants over the last few months:

General Mills
GIS General Mills, Inc. daily Stock Chart

K Kellogg Company daily Stock Chart
Yes indeedy, a trend appears to be emerging.
And we are getting some company:
The David Says Eat More Packaged Food (and short the stocks)
Packaged Goods: "...America's Venerable Food Brands Are Struggling"
Nine of the World's Biggest Packaged Food Companies Have Launched Venture Capital Units
"Hungry for Investment: Big Food Races Toward Startups"
Dealflow: "New Investors Flock To Food"
March 2017
M&A In European Food
I'm not sure that consumer packaged goods is the area to be in, at least not in the U.S. and not based on names like Kellogg or General Mills.
For a quarter-century those manufacturers ratcheted prices as though they were tobacco companies but people find it easier to give up their Cheerios than their cigarettes.
The managements milked that approach for pretty much all it was worth so, as operating entities, they aren't all that attractive but someone will decide the only thing left to do is to asset strip or dividend recap the life out of the former cash cows.
Top o'the market to ya.... 
March 2018

Sometimes This Investing Thing Seems Easy: Consumer Packaged Goods Edition (GIS)
But first, a bit-o memento mori:
We're all victims of our own hubris at times. 
—Kevin Spacey
Hubris is one of the great renewable resources. 
—P. J. O'Rourke
Every time I get accustomed to low volatility, like we were towards the end of the Greenspan era, and we think we have all the levers under the control... something erupts to remind us that the idea that anybody is in control of everything is hubris. 
—Lloyd Blankfein 
All via BrainyQuote We've been talking for a while now about what a lousy business consumer packaged goods (ex-Nestlé) has become...