Will Drought Pop the Popcorn Market?
Those huge paper bags of butter-drenched, super-salty, crunchy kernels may be a threatened species at the snack bar of your local movie theater. The worst drought since 1956 is frying corn plants before those yellow kernels can even reach the popping stage.
Mark Shew, a third-generation popcorn farmer, told Reuters: ”This is the worst season we’ve ever had. In some places, they’re going to be down to counting kernels at the bottom of the storage bins.”
America’s favorite movie snack will be scarcer, but don’t expect to pay higher prices soon. The handful of kernels that explode into cinema’s noisiest treat are a small part of what theaters pay to deliver the treat. Bob Goldin, Executive Vice President of Technomic told Reuters:
The price is already at nosebleed levels, and I think consumers would balk at further price increases, and secondly, and probably more importantly, is that the popcorn portion of the product is a very, very low percentage. So for a dollar bag of popcorn, which we never see, the popcorn portion alone is 5, or 6, or 7 cents. So an increase in the underlying commodity really won’t have much impact on margin for the retailer, and hopefully they will absorb it.
On the other hand, Marc Schober of Colvin & Co. told Reuters the popcorn sold in supermarkets is likely to cost 5 to 15 percent more if the drought doesn’t end soon.
Northeast Nebraska’s irrigated fields are doing better than those in some other states. In Iowa, some July rain ensured a reasonable crop. Elsewhere the drought has cut prospects, not just for the size of the harvest but also its quality. Radio Iowa interviewed Gary Smith, President of the American Popcorn Company, who said:
There is going to be a popcorn shortage because Indiana burnt up in June even, I mean, they didn’t even get started. And we’ve got a lot of competitors in the eastern cornbelt.
I think the test weights will be down. When the test weights are down, then maybe your pops aren’t quite as good, we might struggle with quality issues, but that’s the way Mother Nature treats the product. And I’m just grateful we’re going to have a crop”
Next: Americans Love Popcorn, But Will They Pay More?
Americans love their popcorn. The Popcorn Board added up sales and figured how much people eat. It turns out the average for every man, woman and child in the country is 52 quarts a year. That is some serious popcorn eating.
Should you worry that popcorn will disappear from the movie theater? That is not likely to happen soon, but if prices keep rising the kernels may stop popping. Gary Smith is concerned about that. He told Radio Iowa:
We’re at the highest point we’ve ever been because of the price of corn. Now with the drought, corn prices have rallied more, and so we’re looking at another increase, which is a big worry because at some point, America’s consumer is gonna say ‘your products too expensive, I don’t want you any more,’ and I don’t think we’ve gotten there yet. But where is that threshold? I’m not absolutely sure.
Even people who have never heard of the 98-year-old American Popcorn Company will know one of its branches, Jolly Time Popcorn. Four generations of the Smith family have been in the popcorn business. They know their product. The current generation tracks the drought news and can’t help but sound a bit worried.
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Photo credits: Thinkstock