Shoppers haven’t rebelled. That was the major takeaway for my colleague Lauren Debter and me after a few days of deeply analyzing consumer brands’ price hikes, profit margins and earnings reports.
Companies have been dealing with rising expenses, and have chosen to pass on those costs onto their consumers. Price hikes of favorite household products and less promotions are now common, while more increases are predicted to hit in the months to come. Many grocery store suppliers have already done multiple rounds of price increases on the same product. Prices for meat, seafood, cleaning supplies and personal-care products jumped by double digits in the last month, according to NielsenIQ, which scans prices at the majority of retailers nationwide.
The big question, Mizuho’s John Baumgartner told me, will hit when inflation, currently at a 40-year high, begins to recede. That will create a lot of tension boiling up to the surface.
“How much do companies give back at that point? How busy does the promotional environment get?” explains Baumgartner. “Retailers are going to apply a lot of pressure and say, ‘When inflation was going up, we gave you carte blanche to raise prices however you needed. Now you have to give some of that back to us.’”
He predicts a tug of war, with our grocery bills in the crosshairs.
— Chloe Sorvino, Staff Writer
This is Forbes’ Fresh Take newsletter, which every Thursday brings you the latest on the big ideas changing the future of food. Want to get it in your inbox every week? Sign up here.
Americans’ Response To Inflation Is Not What Many Expected. Shoppers have been patient but will be tested by more price increases coming this year, Lauren Debter and I report.
How America’s Insatiable Appetite For Chocolate Is Inspiring Change. Around 60% of the world’s cacao comes from West Africa, a region impacted by climate change, poverty and aging cocoa trees. By 2050, researchers predict 90% of cacao-growing land in West Africa will be unsuitable for the crop.
3 Ways Questionable Claims Hurt The Plant-Based Foods Cause. There is no evidence that plant-based alternatives are displacing animal foods. We simply do not have the data to know how consumers are behaving, writes Michele Simon.
Lunch salad time! Here’s what I made myself: a salad of radicchio, citrus, parmesan and balsamic.
Chloe Sorvino leads coverage of food and agriculture as a staff writer on the enterprise team at Forbes. Her nearly eight years of reporting at Forbes has brought her to In-N-Out Burger’s secret test kitchen, drought-ridden farms in California’s Central Valley, burnt-out national forests logged by a timber billionaire, a century-old slaughterhouse in Omaha, and even a chocolate croissant factory designed like a medieval castle in Northern France. Her book on the fight for the future of meat is forthcoming from Simon & Schuster’s Atria Books in 2022.
Thanks for reading the twenty-fifth edition of Forbes Fresh Take! Let me know what you think. Subscribe to Forbes Fresh Take here.