Question about whether food prices are going up due to inflationary effects of high oil prices.
Kelly
Nik Modi
If high oil and fertilizer costs sustain, food prices will go up. Companies have 6-9 month hedging contracts, so persistence is key.
Notes current squeeze is on farmers, not yet on crop prices. Asks who is most vulnerable if consumers are pressured and can't absorb price hikes.
Kelly
Nik Modi
Packaged food stocks are most at risk due to existing volume pressure and less pricing latitude.
Clarifies Primo Brands is water delivery business, not protein bar company.
Kelly
Nik Modi
Confirms Primo Brands is largest home/office water delivery business with Nestle water assets and premium retail brands.
Asks about margin pressure from logistics costs and names companies with Middle East exposure (Pepsi, Mondelez, Coke, P&G). Questions if consumer staples sector goes from top performer to bottom.
Kelly
Nik Modi
Staples were poor performers before this year due to excessive pricing and lagging volumes. Recent sell-off started from artificially high levels as fundamentals hadn't improved.