"No names were mentioned by COO Jeff Harmening, but it looks like Danone's in there taking share and taking no prisoners. And it could get even worse now that the French powerhouse has acquired WhiteWave," Cramer said.
Cramer wondered when the supermarket pressure would trickle down to consumer packaged goods stocks. They have rallied so much in the past few years that their dividend yields now look unimpressive.
The decline of Campbell Soup following its last quarter startled Cramer. It was one of the best performers in the group, but has fallen nearly 16 percent in the past two months. That is a large decline for a food play.
Both Campbell Soup and General Mills moved aggressively into the natural and organic space in search of growth. However, private label companies like TreeHouse also entered the space with cheaper, store brand merchandise.
"The consumer has gotten even more frugal, while the supermarkets are trying to make as much as they can by pitting their suppliers against each other, and there has been unprecedented food price deflation," Cramer said.
Meanwhile, Amazon is beating everyone in the non-produce category, and is desperately trying to move into the same-day produce delivery business.
"The deflation in food is the black hole that investors are just waking up to," Cramer said.
For those investors that own stocks like Kellogg, ConAgra, Church & Dwight, Kimberly-Clark or Clorox, Cramer says to keep one finger on the trigger.
Only when the stocks in this group fall enough to have more support from their yields will Cramer consider it safe to circle back to what he considers the most treacherous group in the stock market.