A market that’s gotten ahead of itself, declining sales volume, uncertainty over whether the incoming Trump administration will live up to its campaign promises. For these reasons and more, Wall Street analysts predict a difficult environment for the food sector, according to a Food Business News report.
Analysts noted that while food companies met expectations in 2016, it was from cost cutting measures, not from sales growth. Wells Fargo’s John J. Baumgartner said that sales volumes are still suffering from the 2008 financial crisis, which is unexpected this far out.
He also noted that while we’ve seen growth in packaged fresh foods, “trying to shop the perimeter is not cheap. The number of households that do that is fairly limited.” The problem for the food industry is the declines in center-of-store sales.
As a possible bright spot, Baumgartner identified the potential cut in corporate taxes, from 35% to 15%, which Donald Trump has promised to do.
Overall, at least for now, the name of the game is uncertainty. And food companies will need to figure out how to adapt to whatever comes their way.
