SOURCE: Rothman Research

Rothman Research

March 19, 2010 08:54 ET

When Exuberance Replaces Frugality in the Consumer Goods Sector

JOHANNESBURG, SOUTH AFRICA--(Marketwire - March 19, 2010) - - The consumer goods industry encompasses a wide range of products - from appliances, automobiles to food and beverages. As demand waned in the wake of a long recession, companies were forced to cut back on production, which had a direct impact on their top line, bottom line and in some case lifelines as well. Take for example automobiles - barring Ford Motors, all other US automakers were forced to accept some sort of a government aid. The magnitude may have varied, but it affected all companies, as the once exuberant American consumer decided to hold their purse strings and became frugal. The US entered the age of frugality as uncertainty ruled the minds of consumers. However, the New Year brought some good news as headwinds changed into tailwinds. The Federal Reserve noted that January's consumer credit rose by 2.4 per cent in January by $4.96 billion to $2.456 trillion. This marks the first time we have seen a gain in about a year. January 2009 was the last gain seen. There was a $6.6 billion rise in non-revolving credit, which accounts for things like car loans, mobile homes, boats, vacations, education, and the likes. The consumers' revolving credit, which is effectively credit cards, did decline again. But at the end of the day, a recovery has to start somewhere. 

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What better reason to look at this sector, which is in the crosshairs of Warren Buffet. Just a cursory look at his portfolio will make it pretty clear. Taken collectively, the top-10 stock holdings for his investment firm Berkshire Hathaway at the end of last year accounted for 87 per cent of the insurer's $58 billion equity portfolio. Four consumer names - Coke, Procter & Gamble, Kraft Foods, and Wal-Mart in this list of top-10 holdings made up 39 per cent of Berkshire's total equity portfolio. So what are two of the major consumer goods such as Kraft Foods (NYSE: KFT) and HJ Heinz Co (NYSE: HNZ) are up to? A study conducted by leading online research platform could put answers to inquiring minds. Direct & free downloadable reports of the intensive research are available by signing up now at or

Kraft Foods Inc. is the largest confectionery, food and beverage company headquartered in the United States and the second-largest in the world (after Nestlé SA). It markets many brands in more than 155 countries. Kraft continues to expand its global distribution platform, most recently with the acquisition of Cadbury. While the combined firm will maintain the leading position in the global confectionery space, challenges related to elevated input costs and soft consumer spending as highlighted above will remain. The stock has returned 9.23 percent year-to-date and 30 percent over a period of 1-year. Sign up today at to access the full report on this company.

Challenges for the H. J. Heinz Company, commonly known as Heinz and famous for its "57 Varieties" slogan and its ketchup are no different. Escalating input costs, difficult economic conditions have been presenting headwinds for this food firms, the firm's globally diversified scale of operations, as well as strong brand strength should enable Heinz to generate strong cash flows and returns for shareholders over the longer term. The Pittsburgh firm through its 'consumer value program,' is running more promotions and offering more coupons to support key brands. It was recently used for its ketchup.

The stock has returned 10.66 percent year-to-date and 41 per cent over a period of 1-year. Know more about the firm, how it plans to tackle the headwinds and how it is pitted against its competitors. Register now at to view the full report on this company.

Visit to see how these companies have grown over the past years.

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