Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Supermarket Short Notes-Week of February 26

|Includes: Diamond Foods, Inc. (DMND), GMCR, MDLZ, NSRGY, PEP, SJM

Here's a few observations from news releases for February 2010 for the supermarket industry.

--Nestle's working on developing a frozen food powerhouse with the acquisition of Kraft (KFT) frozen pizzza division. Combining DiGiorno,Tombstone and California Pizza Kitchen brands together with Stouffer's,Lean Cusine and Hot Pockets will make them the dominant supplier in the frozen aisle.The biggest unknown is how they integrate Kraft's DSD route system with Nestle's warehouse distribution system ?

--Smuckers(NYSE:SJM) partnership with Green Mountain(NASDAQ:GMCR) looks to be a win/win agreement. Green Mountain gets strong brands (Folgers,Millstone ) to promote for their K-Cups and Smucker's get better penetration of the single cup coffee market. Now if they could add Dunkin Donuts to the agreement that would be something! (Smuckers licenses the Dunkin Donuts brand)

--Speaking of Smuckers-- they announced a very good quarter on earnings. Their acquisition of Folger's has been excellent with strong sales and effective cost synergies fueling earnings growth. They continue to take share from Kraft both in the premium segment (Dunkin Donuts vs. Starbucks) and in the core coffee segment with Folger's leading sales growth vs. Maxwell House.

--Smart Balance (SMBL) reported weak sales and earnings numbers for the quarter. I guess consumers are not into paying $ 3 for margarine spreads when they can buy private label and value brands on deal for a $1.

--Diamond Foods (NASDAQ:DMND) acquisition of Kettle Foods overshadowed a good but not great earnings release. Diamond looks to be trying to challenge Pepsico's (NYSE:PEP)(Frito Lay division) monopoly in the premium snack food area Add chips to nuts and popcorn and your starting to the get makings of  a number two company in branded snack food market. What's next pretzels,crackers or beef jerky?

--Looks like the supermarket battles will continue in 2010.Look for more pressure from retailers to modestly reduce prices and gain more margin from food manufacturers.

Disclosure: no positions in stocks mentioned

Disclosure: no positions in stocks mentioned