After years of raising prices, food companies are shifting focus to selling more products to maintain profits, according to Jennifer Williams of The Wall Street Journal. Executives believe sustained volume growth is key, so they are introducing new product variations and investing in marketing to attract inflation-conscious consumers. With price increases reaching their limits, companies are seeking to boost sales through innovation while balancing the need to protect margins amid rising food costs.
After years of raising prices, food companies making everything from cookies to snacks and frozen meals say they need to sell more products to post a profit.
Price increases have been good for profits, but packaged food and snack company executives see sustained volume growth as the way forward, so they are flooding store aisles with new takes on familiar products, such as frozen bar-b-que loaded chicken patties. Executives are also shelling out on marketing and scooping up brand names to entice inflation-wary consumers.
“If you’re [growing] through price increases, you’re usually just keeping up with your competition,” said Anthony Gruber, chief financial officer at Mama’s Creations. “You’re not gaining any more product out on the shelves, and you’re not gaining more consumers.” […]
Price changes have carried more of the load in recent years. While pandemic-era inflation has slowed, some groceries have seen an uptick in prices since last fall and food costs remained near a 19-month high in December. Companies are holding back where possible from further price increases on inflation-wary consumers.
“Price has gone as far as it can probably go in most of these categories,” said Holston. “So volume becomes king.” […]
Raising prices to offset inflationary pressures is important for protecting margins, but with consumers hunting for value, it can be tempting to drop prices so frozen peas and chicken strips sell, Baldew said.
Raising prices to offset inflationary pressures is important for protecting margins, but with consumers hunting for value, it can be tempting to drop prices so frozen peas and chicken strips sell, Baldew said.
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