Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bruce Klein - Credit Suisse.
Bruce Klein - Credit Suisse
Could you touch on just the contract pricing, if there’s a lot of in the near future and sort of I know old history was sort of done a lot of cost price or cost input formulated adjustments and I think the new policy you were able to achieve some cost recovery and sort of how that is going?
David Scheible
First the current contract that we had almost all of them have some sort of escalator or de-escalator clause, depending upon costs or board price movement in the market place. You’ve certainly seen that in pricing this year. This quarter, while pricing was down a little bit, it was almost all open market board pricing. Carton pricing was actually up in the quarter and that’s a reflection of flow through from 2008 cost.
In 2010, I will expect the carton pricing to drop some because it will reflect the lower board prices that we’ve seen this year or input costs that have dropped down. So I mean that is the up and down, that’s why we have had such a strong focus on continuous improvement in synergy acceleration because clearly to improve our margins we’re going to need to do that in 2010.
Bruce Klein - Credit Suisse
Folding carton volume trends? I didn’t catch what it was in the third quarter and what your thoughts are going forward?
David Scheible
Yes so, in folding carton volumes in beverage we’re actually up a little bit in the quarter and consumer food business we’re down in the quarter about 4% or something like that, I think Dan said
Dan Blount
Yes, 3.4%.
David Scheible
3.4%. It was interesting because what I said is that in our core SKUs we actually saw improvement, versus third quarter last year. Third quarter last year was a pretty strong quarter in volume in the food business. There was at that point in time we still hadn’t completely sort of figured out where the crisis was and there was still a lot of product going in the fourth quarter is when you really started to see consumers cut back, but cereal is up, the dry food was up, macaroni and cheese, those kinds of products, Pop-Tarts and were all up.
What we did not see this quarter, that we traditionally see, between 1.5% of our business is really promotional activity. Third quarter is when back-to-school happens. We generally see new SKUs or extensions on SKUs. We saw really none of that for the most part, a lot of our new product activity was substituting other products or taking corrugated or flexible share, but really on a pure new product launch relative to SKU expansion, very little of that. That affected the volume in the third quarter as well
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