SHOWBIZ STOCK WATCH: Popcorn Inflation! Ethanol Production and Corn Belt Flooding Could Mean $7.00 Popcorn in 2009!
by Steve Mason
Moviegoers who live on the East Coast and the West Coast may soon be forced to pay more at the local multiplex because of terrible flooding in the middle of the country. On Wednesday, U.S. corn futures surged to an all-time high, up more than 4 percent. Ultimately next year's disappointing, flood-ravaged corn crop will affect the price of movie theater popcorn.
The situation was already dire. Farmers have a choice when deciding what type of corn to plant, and they have a lot of options. There is Flour Corn; Sweet Corn, generally the stuff you see in the produce department at your local grocery store; High-Oil Corn, which becomes livestock feed; Blue Corn, used for meal and tortilla chips; and Popcorn. There is also the variety of corn that is used to make ethanol.
The 2005 U.S. Energy Bill mandated that 4 billion gallons of ethanol be produced in 2006 and 4.7 billion gallons be generated in 2007. That number is set to go up every year to 7.5 billion gallons in 2012. To accomplish these mandates, the Federal Government is paying subsidies to American farmers to encourage them to grow the ethanol-producing strain of corn.
The end result is that American corn farmers are growing less and less Popcorn. In order to keep farmers from switching to the more lucrative ethanol corn, popcorn and food manufacturers have been forced to increase their bids. That has resulted in a 25-cents-per-bag increase in concession stand popcorn prices at AMC Theatres, and similar hikes have taken place at many US theatres.
With 31 percent of the total 2008 U.S. corn crop expected to be devoted to ethanol, the price of popcorn would already be increasing again next year. Now, however, the disastrous flooding in the Midwest has apparently destroyed a significant portion of next year's crop. Ethanol production and heavy rains in America's Corn Belt have created a "perfect storm" that could result in $7.00 or more for a large popcorn sometime next year.
Hasn't it always been and always continue to be more cost efficient to bring your own popcorn in from the outside?
Perhaps I'm callous but my heart does not bleed for the poor cineplex concessionaires who already charge upwards of $6 for a product that cost them so little to stock (employee salary and overhead included.) I'll concede that corn is has gotten exponentially more expensive in recent times, but even at the current rate, I find it very hard to believe that your local cinema is being buried under rising costs of popcorn. As long as movies are good, the places showing them will be profitable. Refreshments always have and always will be extortion. The $7 figure comes from mania rather than a supply chain model. My jacket can hold a large popcorn and $7 at the same time. I can then use that cash to put a down payment on a large drink or easily pay off a $5 bottled water.
Posted by: DVD Guy | June 12, 2008 at 11:29 AM
yeah at my theater we are already paying 7$ for a mega tub and thats the middle of indiana i could understand like LA or such but theres a corn field like right next door!
Posted by: nick | June 12, 2008 at 12:45 PM
Far be it for me to defend the outrageous prices at movie theater concessions, but keep in mind that theaters don't make much from movie ticket sales themselves. My understanding is about 70-80% of box office receipts go back to the studio. Their only other profit center is the concession stand which is why prices are so exorbitant. Not that I've never snuck a Reese's Peanut Butter Cup (botha) into a theater...
Posted by: 00spool | June 12, 2008 at 02:31 PM