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Some Food Firms Still Doing Well, But for How Long?

Some food companies are still making decent money, thanks mainly to their continued ability to pass costs along to consumers.

genericcherriosBut that could change quickly if inflation continues to worsen.

Colleen Paulson of the Motley Fool notes that General Mills' fourth-quarter sales, released last week, were up by 13.4 percent. " I guess people aren't quite ready to move to generic Cheerios yet, no matter what the economy looks like," she wrote.

But he goes on to note that General Mills' profits fell by 17.4 percent, thanks to a whopping 22.6 percent jump in cost of goods sold. "And situations like this are the prevailing story across the food-producing industry right now, with higher food pricing leading to minimal, if any, gain in profits."

She notes several. ConAgra's fourth-quarter sales leaped, too, by 15.5 percent. But that yielded a puny 1.3 percent rise in operating profits.

If food companies are wondering where to go for profits, Paulson writes, "International growth looks to be the answer."

And many are. Kellogg is buying its way into China. Tyson is expanding its presence in India â€" selling, among other products, chicken nuggets of all things.

But as costs continue to mount, no amount of global expansion will be enough to offset them.

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