Got can openers?

Diane

Del Monte Planning on Y2K Cornucopia
Canned-goods producer says it may sell as much as 2 million extra cases of food
Benny Evangelista, Chronicle Staff Writer
Wednesday, November 10, 1999
)1999 San Francisco Chronicle

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/1999/11/10/BU13485.DTL

[Fair Use: For Educational/Research Purposes Only]

Del Monte Foods Co. is preparing for a slight increase in year-end sales as shoppers worried about possible Year 2000 computer problems stock up on canned fruits and vegetables.

San Francisco's Del Monte, the country's largest producer of canned fruits and vegetables, said it may sell 1 million to 2 million more cases of goods because of Y2K fears, according to the company's latest quarterly financial statement filed with the U.S. Securities and Exchange Commission. Each case holds from 12 to 48 cans. That's a lot of green beans and pineapple, but the increase is a sliver of the 100 million cases of canned food Del Monte sold last year.

Del Monte representatives were careful yesterday to note that the company isn't forecasting year-end panic buying and mass hoarding.

``We're not forecasting any kind of big run, and we certainly aren't going to start a big run,'' said Bill Spain, Del Monte's vice president for corporate affairs.

The Year 2000 problem stems from a computer programing shortcut that could cause computer systems and microchips to misread the year 2000 as the 1900.

Government agencies and community groups like the American Red Cross are advising people to keep a three- to seven-day supply of food and water on hand to weather power outages, food shortages or other calamities that could crop up if computers go kablooey on January 1.

``One of the things we've said from the get-go is we're not going to try to exploit (Y2K), try to turn it into a sales event,'' Spain said.

Analyst David A. Goldman of Banc of America Securities said not many food producers are forecasting similar Y2K increases.

Local supermarket chains say they haven't seen a noticeable rush by Y2K-worried customers and are not sure what to expect as New Year's Day approaches.

``It's hard to attribute to Y2K,'' said Albertson's spokeswoman Judie Decker. ``If you sell 12 more cans of green beans, does that mean people are stocking up? Maybe it means there's a sale, or maybe they had a recipe calling for more green beans.''

The supermarket chain hasn't decided whether to order extra goods. ``We're looking at products and determining what we feel the consumers might be interested in,'' Decker said.

John Nowacki, plant manager for Calistoga Mineral Water Co., said earlier forecasts of a big demand for the company's bottled water so far have fizzled.

``Three months ago, we were anticipating a huge run at the end of the year, but as we kept getting closer and closer to it, there isn't much going on,'' he said. ``The Lucky's, Safeways and the Targets of the world are all asking about extra availabilities for Y2K, but nobody's committing to ordering extra inventories.''

Even Costco Wholesale Co., the warehouse retailer that has made stocking up an art form, hasn't noticed any huge Y2K surge.

``The gut feeling is there will be a certain amount of increased business on certain items on the grocery side,'' said Costco spokesman Bob Nelson. ``But I don't think we're planning for a dramatic increase.''

Analyst Nomi Ghez of Goldman, Sachs estimated that Del Monte's projected sales increase could be worth about $25 million for the $1.5 billion company.

And analyst David A. Goldman of Banc of America Securities said such an increase would translate to an extra penny of quarterly earnings per share.

But any increase would be negated by an equal decrease in sales for the following quarter because if Y2K does not cause any massive problems, consumers who stocked up would have all the canned corn, peas and peaches they need.

Shares in Del Monte rose 50 cents, to $14, in trading on the New York Stock Exchange.

-- Diane J. Squire (sacredspaces@yahoo.com), November 12, 1999

Answers

As a counterpoint... from the lower end of the Bay Area...

Published Monday, November 8, 1999, in the San Jose Mercury News

Year 2000 anxiety subsiding

Anti-Y2K bug bites `preparedness industry'

Los Angeles Times

http://www.mercurycenter.com/premium/business/docs/ y2kbust08.htm

[Fair Use: For Educational/Research Purposes Only]

WASHINGTON -- As anxiety swept the country last year about the frightening fallout from the year 2000 computer glitch, sales of freeze-dried foods soared at AlpineAire Foods.

``In the summer of '98 it went bonkers,'' recalled Rod Allen, sales manager at AlpineAire, a leading freeze-dried foods processor based in Rocklin. ``Our sales tripled.''

Expecting the bonanza to continue through at least New Year's, AlpineAire built a new facility, nine times the size of its old plant and with twice the canning capacity. Then, the bubble burst.

AlpineAire's sales shrank to pre-Y2K levels. Managers laid off one- third of their staff. Their personal incomes plummeted. Now they are barely holding on to the company -- thanks only to their devoted non- Y2K customers, most of whom buy the food for camping.

Hundreds of other companies in the self-proclaimed ``preparedness industry'' have seen a similar boom and bust. They had hoped to cash in on fears that the millennium computer crisis would cause blackouts, power shortages and disruptions in the nation's food supply. But as public uncertainty ebbed, so did their chances for profit.

``We got bitten by the anti-Y2K bug,'' said Allen with a dark chortle.

A few companies were well established. Most, however, started up because they saw a chance to sell everything from $2 flashlights to $800 wood-burning stoves. After raking in the dollars during much of 1998 and early 1999, many have gone out of business or been stuck with inventories they cannot sell or facilities they cannot afford to run.

Experts in consumer psychology and marketing suggest that the rise and fall of the preparedness industry provides a textbook example of the shakeout of a market. It also parallels the ebb and flow of the public uncertainty over Y2K.

``There was much more uncertainty a year ago than there is now,'' said David Stewart, a consumer psychologist and professor of marketing at the University of Southern California. ``There has been enough reassurance now that the world will not come to an end that people believe it will not be catastrophic when we turn the calendar.''

Clearly, Y2K has been fantastically profitable for some companies. Computer and engineering consulting companies have profited handsomely by peddling their skills to prevent what could be devastatingly expensive Y2K computer crashes.

Companies that rent or sell generators also have made large profits because many businesses are unwilling to risk even a tiny chance that power might be interrupted.

But businesses driven by consumer fear rather than business prudence have suffered. And their backers -- who started with dreams of riches -- are angry at the government for calming the public.

``The government is trying to keep us from going into a panic,'' said James T. Stevens, the grandfather of the preparedness movement who writes books and speaks about self-reliance. ``There's going to be a lot of anger, if indeed we find out there were problems.''

-- Diane J. Squire (sacredspaces@yahoo.com), November 12, 1999.

Well, we're doing our part :-) Del Monte has these incredibly delicious peaches 'n wildberry plastic cupfuls, also tropical fruit, in fruit juice, no sugar added, two per pack, 12 sets per carton. We gotta bunch at this really awesome outlet store that is soooo discounted. So will have juicy natural scrumptious fruit cups every day as we huddle 'n shake while the world crashes to ruins outside.

Go Del Monte!

-- Ashton & Leska in Cascadia (allaha@earthlink.net), November 12, 1999.

Diane,

Thanks for the post. I'm telecommuting tomorrow,I think I'll pop over to costco on lunch. I am making a wonderful green-bean dish this weekend. The recipe calls for a 6 - 8oz cans of DelMonte French Style Green Beans.

ps. I just got everyone settled in for the night and wanted to see how the day has progressed here. Its 11:30, are you still up?

;-)

-- hohohogreengiant (karlacalif@aol.com), November 12, 1999.

And how, pray tell, are they planning on distributing this cornucopia when food distribution networks run at OVER 100% during a normal Christmas / New Year season (i.e. perishables are left to spoil)? Too little, way, way too late.

-- Colin MacDonald (roborogerborg@yahoo.com), November 12, 1999.

Great preparedness.......let's see, if we divide the 2 million extra cans by 260 million people, we're prepared for less than 0.01 days. Hmmmmmmmmmm.

-- ugh (this@isn't.good), November 12, 1999.

The local supermarkets will notice something the last week of this year. Those whom are not prepared will panic. Shop early and shop often. I have noticed alot of canned goods are on sale at Walmart.

-- y2k dave (xsdaa111@hotmail.com), November 12, 1999.

Canned vegetables on sale this week at Lucky/Albertson's - 3/$1.00. Bought DelMonte canned peaches 3 weeks ago at Safeway 12/$6.00. S&W was originally on sale but they sold out and substituted DelMonte. I'm on my way to Lucky's to buy canned green beans for that green bean soup that will come in handy on one of the many green beans for dinner days ahead. Can't get enough of those green beans.......

-- bardou (bardou@baloney.com), November 12, 1999.

Most of my canned stuff is not Del Monte--usually get the house brands. I have pineapple in juice, which is good. In NY I left for my friend pears in juice from Israel (I think). Other stuff I might have light syrup.

-- Mara (MaraWayne@aol.com), November 12, 1999.

This alone makes me think... "we're in BIG trouble!"

Thanks Koskinen... and Clinton... this country is woefully under prepared due to you two. Not even for 3-days!

Your mission... has been accomplished.

*Bummer*

(May your karma teach you some "interesting" HARD lessons).

Diane, remembering

-- Diane J. Squire (sacredspaces@yahoo.com), November 12, 1999.

Del Monte just answered the question "What percentage of the population is preparing?". They're producing an extra 2 million cans of product on top of a regular production run of 100 million cans.

That works out to two percent of additional production needed to handle all the expected increase in business for Y2K preparations. Two percent of the population is trying to prepare to the point that they can have the luxury of eating canned peaches and not just rice and beans (or whatever can be found).

Two percent are the hard core preppers. Now if DelMonte had announced a fifty percent increase in production for Y2K instead of just two percent, I'd feel a lot more confident about levels of public preparedness.

WW

-- Wildweasel (vtmldm@epix.net), November 12, 1999.

I just bought a twelve-pack of Del Monte stuff on sale at the front of the super market. Oh, well, now they are down to less than .02 cans per adult. ;-)

-- cgbg jr (cgbgjr@webtv.net), November 12, 1999.

Let's see...2,000,000 cases, 24 cans/case= 48,000,000 cans, distributed among over 240,000,000 people, adds up to .2 cans per person. Not much of a three day supply...

-- Mad Monk (madmonk@hawaiian.net), November 12, 1999.

Thanks for the post Diane....Hey Weas-man..

"That works out to two percent of additional production needed to handle all the expected increase in business for Y2K preparations. Two percent of the population is trying to prepare to the point that they can have the luxury of eating canned peaches and not just rice and beans (or whatever can be found)."

Whoa...sounds like I have more thn my fair share then...guess I'll just take it back to the store so the poor late preppers have something to buy Dec. 30th.....Actually it might be that since Del Monte isn't the cheapest line of canned food the preppers bought another brand.

Then too they "said it may sell 1 million to 2 million more cases of goods because of Y2K fears", really they don't know.

"Two percent are the hard core preppers. Now if DelMonte had announced a fifty percent increase in production for Y2K instead of just two percent, I'd feel a lot more confident about levels of public preparedness."

Actually the hard core preppers bought trees years ago and canned their own (folks like me have been buying food the last 16 months or so).

-- Don Kulha (dkulha@vom.com), November 12, 1999.