Mr. Mushkin: We do supermarkets, drug stores and packaged foods. So Kroger and Safeway, Smucker's in packaged foods, and then of course CVS and Walgreen. Those are a good sample.
TWST: Are companies like Chiquita and Fresh Del Monte included in that?
Mr. Mushkin: Yes, exactly. They are included in the packaged foods coverage.
TWST: What is your outlook for companies like Chiquita and FDP? They are partly agriculture, partly packaged food companies.
Mr. Mushkin: They are a little different. I'll take Chiquita first off. They have 40% of their business out of Europe, so clearly what's going on in Europe is having a somewhat dramatic impact on expectations for the company in two ways. One is currency, and the second is that they sell premium bananas. And as the European economy starts to slow significantly, that would hurt them on sales as well.
For Fresh Del Monte, a very different strategy. They're much more a vertically integrated fresh fruit company. Where Chiquita is basically a banana business and a salad business, FDP is more global. They are also exposed to bananas but are very heavily exposed to pineapples, melons as well, and a little bit to tomatoes. It is a very asset-rich company, vertically integrated; they own a lot of their land that they farm on, own a lot of their ships and distribution systems. So with that company, the one concern would be deflation, which is not great for asset-rich companies. Fruit is generally somewhat linked to wealth. The wealthier you become, the more fruit you eat as a society. And the less wealthy you become as a society, the less fruit you tend to eat. So global growth and global inflation tend to be a very good friend for Fresh Del Monte, given their asset-rich base and what they are selling.
Trends have been good because of what's out there - the building of wealth in the developing world and of course the consumption in the developed world, plus the health benefits to fruit consumption are fairly significant. So the general trend has been somewhat positive for someone like Fresh Del Monte, who owns a lot of land, especially in some of their premier growing areas, like the Caribbean, where land value has been going up because of the scarcity value there.
Tickers included in this excerpt: BN.PA, CQB, CVS, DOLE, FDP, KR, SJM, SWY, WAG
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.