2009 Gloom & Doom Update: Economy Takes a Bite Out of Your Lunch!

2009 gloom and doom update

Like all other sectors of the economy, the food and beverage sector is also facing a crunch. The cost of food supplies has risen globally, as have costs associated with packaging and distribution. All large and small suppliers, manufacturers and vendors are facing the same issue.

At the end of the day, all costs will be transferred to the customer- the question is simply: how? The supply side faces two simple choices: increase the price or reduce the size?

In the case of restaurants and prepared food vendors, it is often easier to reduce portion size rather than increase prices. From Dubai eateries to Girl scout cookies in the US, all are becoming smaller.

In the case of basic food, global food prices have been SOARING and the news has been littered with stories of global food crisis for months. You name the country and there is a report about it. Here is a sample across the continents: South America, North America, Europe, Africa, Asia, Australia.

This has been an ongoing problem which attracted major attention last year- it’s just that we forgot about it amidst all the recent sobbing over economic woes. It is also a problem that is not going away and will be (along with the financial side) the reason for upcoming political instability in several emerging markets.

People are not interested in moral high ground and democracy mantras when they are starving and burying their children!

2009 Gloom & Doom update: a spot of advice for 2009

Disclaimer: This post in not meant to be a downer, just an assessment of the past few years based on indicators that I have been watching since 2003. It was obvious in 2003 that the global financial markets would collapse within 5-10 years. By 2006 it was clear that 2008 was going to be a major eye-opener for everyone (even those not watching indicators). The question now is how low will it go? Will *ALL* the systems come crashing down at once? Or will they follow each other? If all at once, the low will be VERY low. If they follow each other, then the low will not be as bad however the misery will last longer. 

To recap:

2007 was a year of disappointment for many. Financial expectations, business growth and life in general did not work out as planned. The global economy had started to slow but people were mostly not paying attention to the indicators. It was just a few that were starting to face resistance after years of ease. The savvy were pulling out to capitalize on their gains from the previous years. There were a few bankruptcies, several near bankruptcies and some merger attempts.

2008 was a year of transition for many. The market visibly tanked and the global markets were hurt. No one needed indicators any more as we all either faced hardship or knew someone starting to face hardship. Major international conglomerates laid off workers and instated hiring freezes. People who were unemployed were looking and not finding anything. Next years graduates saw a huge decline in interviews and offers. Suicides rates went up.

Moving forward:

2009 will be a year of despair for many.

The upcoming year is going to be hard on many people. The global financial situation is going to get worse before it gets better. SAVE! SAVE! SAVE! Everything you save will be needed later. If you have a miserable job, don’t quit yet. If you do not have a job, grab what you can. It will be worse than many of us remember. None of the indicators are pointing towards anything good.

Expect an escalation in crimes like theft. Expect an increase in riots and protests in various Asian hotspots. Expect growing unrest in Europe. North American social welfare systems will get taxed to their breaking point.

Cracks will emerge that will over the next 5 years result in the changing of some national boundaries.

And thus we continue our journey in life.