Best of Bloomberg Intelligence (05/10/2022)

The video discusses the ongoing rise in commodity costs and its impact on consumer staples. Analysts from Bloomberg Intelligence highlight that input costs have not yet peaked, leading to inflationary pressures on margins. Companies have been passing these costs onto consumers, but concerns about price elasticity and consumer trade-down behavior are growing. The analysis reveals that while overall price sensitivity is low, it varies across product categories, influenced by substitute quality and brand equity.

What are some of the commodities mentioned that have seen sharp cost increases?

• Rice and corn

• Wheat and sugar

• Meat and coffee

• Oil and gas

How have consumer staple companies managed rising input costs?

• By increasing advertising

• By passing costs to consumers

• By cutting employee wages

• By reducing product quality

What is a key concern for companies regarding substitutes in consumer staples?

• High production costs

• Inability to meet margin targets

• Limited market reach

• Lack of brand recognition

What factor influences consumer trade-down behavior in different product categories?

• Advertising campaigns

• Quality of substitutes

• Store location

• Product packaging

Which product categories are mentioned as having potential for consumer trade-down?

• Frozen plain vegetables and spices

• Dairy products and snacks

• Personal care items and cleaning supplies

• Beverages and cereals