Food makers want to sell cheap food for big profits

Gone are the days of pushing “premium” food offerings, says the Wall Street Journal -big food manufacturers like Kraft and Campbell are going to be pushing “cheap” foods like tomato soup and cheese singles – foods which are thought of as “easy on the wallet” but are still hugely profitable for the manufacturers.

But lower-priced “value” products can also have wide margins because they’re cheaper to make. “Food companies will be careful to shift consumers to products that are still high margin,” says Robert Moskow, an analyst with Credit Suisse. “Powdered Kool-Aid beverages are one of the most profitable food products in history.”

Also Monday, the milk industry will begin running ads touting milk as a bargain. Financial guru Suze Orman will don the familiar milk mustache in a print ad that reads: “Even at today’s prices, a glass of milk only costs about a quarter…” The ad is a big departure from prior “Got Milk” campaigns that focused on the nutritional value of milk.

The milk industry plans to spend just under $1 million on the Suze Orman ads.

The WSJ says the new campaigns indicative of a food industry that’s afraid of consumers. Shoppers have been pinched by a 7.5% jump in food prices in the first 8 months of 2008, and have started buying generics. Oh, no!

If you’re a member of the PTA, you can expect ConAgra to start giving you the hard sell on their cheap Banquet frozen dinners