just-food's exclusive partnership with the Consumer Analyst Group Europe conference last week provided us with the chance to hear how the likes of Nestle, Danone and Unilever viewed the current trading environment - and many of the companies presenting struck a somewhat cautious tone.

Sure, there was optimism about the prospects for emerging markets and almost all companies used the opportunity to demonstrate to analysts just how they were committed to building a presence in the developing world.

PepsiCo, a company that was keen to assert its history in emerging markets, is nonetheless now building a serious business outside the US and Western Europe, particularly in Russia, which, in the last three months, has become the company's largest overseas market.

The US food and drinks giant's acquisition of Russia's largest food and drink company Wimm-Bill-Dann has, according to stats cited by the company, made it twice the size of its nearest competitor in the country, the venture between Danone and Russian dairy Unimilk. However, PepsiCo does not want to stop there and Zein Abdalla, the head of its European operations, insisted to the CAGE conference that the Lay's maker wanted to "accelerate away from the rest of the pack" in Russia.

Nevertheless, for all the upbeat messages on emerging markets, there was an air of caution at CAGE about the prospects for 2011. Commodity prices remain a pressing problem and some of those at the conference - including Danone and Premier Foods plc - edged up their forecasts for input cost inflation this year.

Commenting on the food sector more broadly, analysts at Morgan Stanley said last week that food manufacturers' input costs are likely to rise by an average of 9-11% during this year alone. Food makers will continue to look to pass higher costs down the supply chain to consumers. However, the costs will likely weigh on the profitability of manufacturers during the first half of the year as price hikes lag the rising costs.

Unilever is one company that some believe could see margins come under pressure. Its spreads business is one that is facing "challenging" input costs, Unilever CEO Paul Polman told just-food. He had told CAGE that the Flora and Becel maker is looking to run the unit - focused mainly on North America and western Europe and one that some have speculated could be sold one day - more efficiently and with "30% less people".

However, Polman dismissed suggestions that the reduced staffing numbers would mean factories would be closed or jobs lost. Employees, he said, would be redeployed elsewhere. And the strategy, Polman insisted, is already yielding results.

Input costs - alongside emerging markets - was a key theme of the CAGE conference. CSM, the Dutch group that makes bakery products for the likes of Starbucks and Wal-Mart Stores, said it would continue to increase prices throughout this year, even after a 2.5% rise in the fourth quarter of 2010. Ebro Foods, the Spanish pasta-to-rice group, has faced rising wheat prices and its CEO said it would be tricky to "difficult" to maintain the margins that its pasta business generated in 2010.

However, Nestle chief Paul Bulcke was more sanguine about the impact of commodity costs. He told CAGE that the world's largest food maker was busy looking to "drive waste out of the system" but, pointing to the underlying trend of rising commodity costs, said higher prices would be "no bad thing" if it meant more investment would flow into agriculture.

In the longer term, this investment could benefit companies that rely on commodities like coffee and cocoa. More money for farmers in the developing world could improve practices, yields and therefore supply. So, while some struggle with the spike in commodity prices, it could be worthwhile taking a longer-term view and consider that, in the years to come, manufacturers could, in fact, see a benefit.