Planetdrum6

Kraft Foods: Buffett's Commodity Prediction

I agree with you, Eric, on Tobacco, Spirits and (mostly) Natural Gas. The first two have the wonderful wide moat of addiction protecting them, a la Peter Lynch.

I don't agree on the Pharma parallel (though certainly a big generic drugs producer should also act as a great inflation hedge barring congressional meddling...). Branded consumer staples are vulnerable to "trading down" in tough times, but if the relative gap between premium brands and value brands stays the same in an overall rising price environment, the impact should be muted. Your comment about the $5 cereal vs the $8 cereal illustrates this. In an $8 cereal world, milk would cost $10 a gallon and the median US income would be $65K/year. Everything would stay relatively in line, and brand-buyers would just keep on buying brands.

Of course if food prices rise but wage levels don't, you have a very good point. I just don't think that will happen long-term. And anyway if it does, KFT's share price is low on my list of worries -- at least somewhere below finding a second (or third) job...