Retailers are demanding price cuts from food makers

[babylonsister]

Stores, food makers compete on retail prices
By EMILY FREDRIX and SARAH SKIDMORE Associated Press Writer


Mar 15th, 2009 | Retailers, who begrudgingly went along when food makers pushed up prices to recoup record-high costs, are flexing newfound muscle and demanding price cuts to match the recent steep retreat in ingredient costs.

Food makers are resisting, saying the uncertain economy and volatile costs make price cuts unwise. But retailers aren't backing down.

Consumers -- who responded to the higher prices by favoring grocers' in-house products over national brands and by shopping more at discounters -- may end up with fewer choices all around.

"We don't have to carry three brands," Costco Wholesale Corp.'s Chief Financial Officer Richard Galanti told investors earlier this month. "We can choose between brands that are going to be more aggressive, that help us help our members."

Costco has been lowering its prices, Galanti said, and is prepared to sacrifice profit margins and cut national brands that won't negotiate on pricing -- if that's what it takes to drive sales.

"We are not the only ones out there pressuring manufacturers," he said.

more...

http://www.salon.com/wires/ap/business/2009/03/15/D96UII8G0_food_fight/index.html

[Skink]

1. Just spent 2.50 for dish detergent that a year ago was1.08.

It's not just food at the grocery store.

[skooooo]

2. Luv me my Costco!

[LakeSamish706]

4. Me Too! They are definitely a good Corporate Citizen... n/t

[sendittozoom]

21. Don't you have to pay for membership, though? Can't see how that saves very much money...

especially when they seem to carry large quantities of stuff. My household is two people and I wouldn't do very well there. Plus, I enjoy buying natural foods...Do they even sell them there? I guess I should try it out at least once, huh?

[skooooo]

22. I'm not sure how much membership costs..

We stock up on things like coffee, toilet paper, cat litter, peanut butter...

Mileage varies, I'm sure.

[Missy Vixen]

23. It's fifty bucks a year

We just renewed last week, and my husband's out of work. We're carefully watching our money, and Costco is still a bargain for us.

If you have a business, you can write the expense off. You can also go on a "one-day pass", which means you pay zero and you can try out what the warehouse has to offer for one day.

In the meantime, we save an amazing amount on everyday items. Example: An entire card (over 20, if I recall correctly,) of triple A batteries, Costco store brand -- $10. The ten or so per package in the grocery store -- $10. Thirty pounds of superior cat litter: $7. Twenty pounds of Costco brand cat food: $16. Organic hamburger: Three pounds for $12. Milk: Two gallons for less than four dollars. We also live in the Seattle area; our cost of living is higher than it would be in other parts of the country.

I'd much rather spend the $50 with a blue company than get socked for much more than $50 a year by a company that doesn't treat its employees or customers well.

[LostinVA]

25. Also: their compact fluorescent bulbs are sooo cheap

Even cheaper than IKEA. We replaced every bulb inside and outside the house for less than $20, AND they take a tax rebate off the top of the cost.

[LostinVA]

24. They carry LOTS of organic and natural foods

Including produce, dairy, bred, meat, and processed food -- including Newman's and Amy's, as well as their own brands. They even have their own line of cleaning products as good as Seventh Generation.

The membership is $50 a year. Haruka and I figured we made up the membership within three months. It pays for itself in what we save on toiletries in a year (toothpaste, tampons, contact solution, etc.).b We've had our membership a year now, and figure we've saved at least $400 this past year, probably more. You can even save money on movie tickets, Starbucks, etc.

And, there are only two of us, and the quantities are definitely not too much for us to consume. For example, their organic milk comes in a three-pack -- we use about one half gallon a week, and we save $3 for every three-pack on what the same milk would cost in a grocery store. On that product alone, we save about what the membership fee costs.

[Why Syzygy]

3. Every time I shop

prices have gone up. It's hard to even budget any more because you just don't know.

[JVS]

5. I remember reading once about how in the depression, lower costs for producing cigarettes...

led to the establishment of numerous 8 cent brands when the 10 cent brands kept their price the same

[DJ13]

6. The food companies are screwing us like the oil companies were

They keep increasing their prices (or theres less product in the same size package) and claim its because their raw materials have increased in price, but those prices collapsed 7 months back........

[tridim]

7. I've mentioned this several times in the past week because it's just insane

Wheat Thins are now $3.79/per box on sale, $4.59 not on sale. A year ago I could buy 3 boxes of Wheat Thins for $5.00. That's about a 250% price increase in one year. WTF?

[grasswire]

9. and the boxes get smaller and smaller nt

[Name removed]

8. Deleted message

Message removed by moderator. Click here to review the message board rules.

[babylonsister]

10. So we should all just let the suppliers gouge us, because they

will if no one says a word? There'd be no end if this is allowed. The supply chain will adjust. They have to eat, too.

hi, and welcome to DU.

[Lochloosa]

11. nicheblueprint99 please read DU's rules

"Do not use our message board for personal fundraising, for-profit advertising, or selling products or services, except in the specially-designated "DU Marketplace" forum. We will occasionally make an exception in cases where the product or service contributes to the Democratic or progressive cause, provided that you ask an administrator for permission before you post."

Link here: http://www.democraticunderground.com/forums/rules_detailed.html

[nichomachus]

14. Addendum to the rule

Other members should also not click on a link unless the poster tells you what the link clicks to.

It's one thing to post a link to a story with more information or even a photo or something, but it's common courtesy to tell people what they're clicking on -- I never follow links without knowing what it is and why I'm clicking on it.

I never, for example, will click on something that says. "Hey, have you seen this?" followed by a URL.

[Lochloosa]

16. Good rule. Thanks.

[skooooo]

12. Suffer as in go without food??

I think not. I think they could spare a little profit -- just this once....

:eyes:

[sandnsea]

13. I think consumer pressure

is part of the free market system.

[sendero]

18. Everyone is already suffering..

... the "supply chain" can suffer along with us.

[Nikia]

15. Cutting costs for a food manufacturer isn't always in consumers best interest

Most Americans agree that food safety is important. There is a cost to food safety. There is a cost to food quality. Until there is an outbreak or large numbers of people realize that something is different about product X, no one outside the company knows that this is where the company saved money. As a food processing professional, I wish that our company charged more for their product. I'm tired of cheap low quality ingredients from vendors who we should drop, but don't because they are the cheapest. I'm tired of old equipment that should be replaced, but isn't because we can't afford better. I'm frustrated that it is hard to meet all food safety requirements time wise because we can't afford to hire another person in our department.
Bigger companies have more options. Some of them just outsource, which isn't good either.
Why should manufacturers have to make sacrafices to their product or workforce while large retailers make large profits?

[Donnachaidh]

19. why should consumers who are out of work guarantee set profits for food processors?

The economy is in crisis. EVERYONE is taking a hit one way or the other. WHY should food processors be allowed to raise prices without some sort of cap? NO ONE is guaranteed a set profit margin nowadays. If the processors don't adjust to aid consumers, they deserve to go out of business.

Free market -- if you don't work with your customers, you won't HAVE any.

[bettyellen]

20. but when their costs go down dramatically, they can reverse the recent price hikes

they want all the ups and none of the downside. it;s wrong.
good for costco for putting the screws to them.

[Imagevision]

17. Dollar Store sales have gone thru the roof while keeping low prices on simple sh*t...

[dixiegrrrrl]

26. 'Round here, Dollar Store prices have jumped also.

I spend about 3/4 of my grocery budget at the Dollar Store, esp. in toilitries, pet food, soap, and some brand name food stuffs.
Prices suddenly jumped last year, for no apparent reason. 2.00 boc of Wheat Things went to 2.25, then 2.50.
1.00 bag of rice went to 1.25.
Bag of Dog food is 2.00 higher.

Stil, prices are lower that at regular non-sale grocery stores, but the savings have been reduced for my wallet.

[DLnyc]

27. When we stop paying these prices (by buying cheaper alternatives), the prices

will come down. The reigning logic should be "it is insane to raise prices in a depression". Unfortunately, the logic of a lot of these over-sized companies is "We are selling less stuff, so we have to charge more for it." However, plenty of (mostly smaller) companies will undoubtedly see that they can make good money by putting out a better product for less money (and saving a bundle on advertising, flamboyant packaging, "placement fees", designing a new product every two weeks and so on).