WASHINGTON — Stock prices of grain-based foods are underperforming significantly compared to the rest of the market, according to Bema Intel data for Q2 2024, conducted by Cypress Research.

Grain-based food stock prices were down 9.3% for the quarter compared to a year ago, while the S&P 500 during the same period rose 23%. 

“Unfortunately, the picture isn’t a pretty one at the present time,” said Josh Sosland, editor of Milling & Baking News and Food Business News. “While the overall stock market was scorching hot in the first half of the year, reaching new all-time highs, as of mid-year grain-based food shares were almost 20% off their highs.”

While grain-based food stocks rallied almost 5% near the end of Q3, Sosland noted their growth still trails an overall market that has continued its upward path.

This underwhelming performance is reflected in downward trends in center-store bakery and the perimeter. Dollar sales for center-store bakery fell 0.2% for Q2 to $22.2 billion, while units dipped 0.8%. In-store bakery dollar sales slid 0.3%, although unit sales jumped 0.7%. 

There were bright spots, however. Donuts performed particularly well in Q2, increasing dollar sales (3.1%) and unit sales (3.7%) compared to a year ago, while in-store bakery dollars and units rose 6.2% and 0.3%, respectively. Brownies, squares and bars are doing well in the in-store bakery, up in dollars (2.2%) and units (4.5%), although they fell in center-store (-3.5% and -5.1 respectively).

The biggest declines were seen in center-store cakes (-7.3% in dollars, -7.4% in units) and center-store snack cakes (-6.8% and -7.6%).

Thankfully, inflation’s impact on the industry has cooled from the highs of recent years, with the consumer price index for bakery products increasing a modest 1.3% for Q2 compared to a year ago. Additionally, bakery ingredient costs were down significantly in Q2 for products like white pan bread (-22.5%), cake donuts (-18.2%), shortbread cookies (-22%) and devils food cake (-12.2%). 

“They may not be where we need them to be as an industry, however this is good news,” said Marjorie Hellmer, president of Cypress Research, during her presentation of the data at Nexus 2024, held Sept. 30-Oct. 3 in Washington, DC. 

Sosland cautioned, however, that while inflation is low, prices remain quite high.

“The shockwaves prompted by two years of rising prices continue to be felt, and in many consumers’ minds, food prices are too expensive,” he said. “Predictions from many food companies’ CEOs that consumer behavior would normalize in the second half of 2024 have yet to be realized.”

Bread prices at the end of June, for example, were 25% higher than in June 2021. The same is true of cookies (25%), fresh cakes (20%) and crackers (36%).