If you want to reduce your grocery bill or save money, this is the advice that will work for you. Take a list with you to the supermarket and follow it. Do not let impulse purchases get in the way of your shopping goals.
However, even if shoppers are fond of brand-name products, discipline may not be enough.
According to the Bureau of Labor Statistics’ monthly Consumer Price Index, grocery prices increased by 7.4 percent in the past year. The inflation rate has reached a record high of 40 years.
These are all well-known reasons. With its supply chain delays, labor shortages and supply chain delays, the lingering pandemic economy continues to drive up transportation, agricultural commodities and packaging costs.
Many companies are now passing on rising costs to customers as big food and beverage companies, grocery stores and other retailers struggle to keep up with them. The most notable increases have been in brand-name products from large food producers like Kraft Heinz or Coca-Cola.
Prices of store or in-house brands have not increased nearly as much. These include Good & Gather lines from Target, Great Value at Walmart, and 365 from Whole Foods Market.
Phil Lempert, a Supermarket Guru and food marketing expert, said that store brands have higher prices than national brands. They have a contract with suppliers for one or two years. It’s a fixed price. “The manufacturer will absorb it, not the store in the short-term.”
In-house brands are often manufactured by outside companies, which protects them against rising costs. National brands, however, are often in charge of their manufacturing and distribution, and can absorb any price rises along the supply chain.
“Companies have been taking in a certain amount of cash, and they cannot continue doing that.” Lempert stated that they must pass it on.
They have not been ashamed to do it, or boast about it. Kraft Heinz announced Wednesday its quarterly earnings, surpassing Wall Street’s expectations. Paulo Basilio, Global Chief Financial Officer, stated that while we did not fully implement or announce all of the pricing plans for 2021, we now have additional pricing options.
This is a common refrain for executives at several major food- and beverage companies, including Mondelez, Coca-Cola, and PepsiCo. Mondelez owns brands such as Ritz and Oreo.
“We expect another year of material costs inflation,” stated Mondelez Chief Financial Officer Luca Zaramella. He went on to explain how Mondelez would be benefited. “Pricing will therefore be a greater top-line contributor than it was in previous years.”
Some consumers will be loyal to certain brands while others will change their spending habits. A survey by Jefferies Group found that 80 percent of respondents were looking for ways to reduce their spending, such as buying cheaper products and private-label brands.
Lempert stated that although price differences can be wide-ranging depending on the product being sold, retailers have taken concerted steps to raise the quality of their stores and keep prices down while maintaining brand-name products. This is a potential advantage for retailers.
Whole Foods Los Angeles’ 365 brand organic black beans retails for $1.39 per 16-ounce can. A brand-name 15.4-ounce can is $3.79. Los Angeles: A dozen cage-free eggs purchased from Target’s Good & Gather Brand cost $2.79, while a dozen pasture-raised eggs bought from Vital Farms cost $5.69.
According to Jefferies, “if prices rise (and they most likely will),” shoppers will be more inclined to cut costs.
Walmart, the nation’s largest retailer is betting on this. This company is considered a bellwether and reported higher-than-expected earnings on Thursday. Walmart CEO Doug McMillon summarized his outlook as follows: “During periods like this, middle income families, lower-middle income families, and even wealthier families become less price sensitive, and that’s to Walmart’s advantage.”
Braga rights are yet to be determined.
