Has the inflation pricing manual changed? – RetailWire

March 11, 2022

By special arrangement, presented here for discussion is a summary of a current article from the bimonthly e-zine, GIC account.

Consumer packaged goods (CPG) companies aren’t just defensively raising prices to offset rising ingredient, labor and shipping costs. Their strategies for dealing with this historic new era of inflation include working with retailers on more deliberate and symbiotic plans for pricing and promotional practices.

“Our advice to clients is that this is an opportunity for them to reflect the true costs of doing business,” said Ken Harris, managing director of Cadent Consultants. GIC account. “And retailers – while not enthusiastic about the price increases – must and will allow them.”

“It’s all about collaboration,” said Theresa Motter, CEO of Van’s Kitchen, a Dallas-based supplier of spring rolls to supermarkets and convenience stores. GIC account. “You need to have these conversations with suppliers and customers, whether it’s [prices] go up or down. »

Beyond any trade spend adjustments, paying attention to price differentiation is another tactic. Mr Harris said: ‘There are commodity price sensitivities that can put manufacturers at a disadvantage if they take, say, a 10% increase across the board versus a 20% increase on items and products high value at 2%. You have to think about it thoughtfully. »

Longer term, new insights are being explored on how to modify products, packaging, consumer testing and marketing to help navigate the new price minefield.

Changing prices more frequently is another option. CPG brands traditionally changed their prices every six months or every year and created promotional calendars and spot price events where any movement was almost languid, easily accommodated by a small increase in food CPI from year to year. the other. Yet many major retailers change prices daily.

So far, there have been few signs of a significant pushback by U.S. consumers toward higher food prices, though the higher prices may push more consumers toward store brands that are generally less expensive.

With record profits reported by several GIC providers, some are wondering if prices are being raised too aggressively despite price elasticity at historic lows. Joel Warady, CEO of Catalina Crunch, the keto cereal and snack brand, said, “We have a responsibility as food companies to feed people nutritious products as efficiently and economically as possible while achieving benefits.”

DISCUSSION QUESTIONS: What traditional and newer pricing approaches and mitigation tactics should CPG brands explore to counter inflationary pressures? What unique challenges does the current inflationary period create compared to previous ones?


“The thing that GC manufacturers need to worry about most is private label.”

“Retailers may consider accepting the full cost increases on some items, but absorbing most of the shock on pantry staples and store brands to send a message of solidarity to shoppers. .”

“We are already seeing the return of ‘shrinkage’ and, not in the typical sense.”


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