|
|
 |
|
Viewing report
|
|
|
|
United States Food and Drink Report Q1 2010
Business Monitor International, Jan 2010, Pages: 87
United States Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the United States' food and drink industry.
In response to the economic downturn and a trend towards private labels, several firms have embarked on ambitious price cutting strategies since the start of 2009. Danone led the way and the positive impact on the firm's sales and share price encouraged others, including Unilever and Nestlé, to follow suit. In contrast, Sara Lee's resistance to the trend resulted in its volumes dipping sharply over the year and this continued in its most recent financial quarter. However, in November, Sara Lee joined the price cutting bandwagon, with CEO Brenda Barnes saying that the firm hoped to boost top line growth during the rest of 2009 by investing in pricing. During a conference call Barnes revealed that on pricing Sara Lee would be ‘recalibrating but not significantly racing ahead of the curve’ adding that it would not do ‘crazy things’ to drive up volumes.
The downturn has prompted retailers to invest more in their private label ranges, including in the areas of marketing and product development. This has boosted private label’s market share but the price cutting strategies adopted by major food firms have to some extent tempered this trend. The CEO of Belgian retailer Delhaize, Pierre-Olivier Beckers, commented on this pattern, suggesting, ‘when national brands fight for the growth of their top line with some very interesting promotions consumers are interested. [Recently] we have seen a lesser increase in private label than in 2008 and early 2009.' In sectors particularly exposed to an onslaught from private label products, a good case can be made that the firm should have moved to cut prices earlier. On the other hand, the authors have concerns that price cutting actions could undermine brand equity and make it difficult to raise prices once the economic environment improves.
For firms less exposed to the private label threat such as Unilever, which has spent the last several years exiting segments particularly threatened by the rising popularity of private labels (a move that is reflected in our core long-terms views), this may be less of a problem. However, for companies such as Sara Lee, which are dependent on sectors where market share increases from private labels is a danger (including in baked goods and coffee), a short-term reduction in prices may be harder to reverse. This perhaps explains the reticence to move in this direction. However, if the alternative is a steady decline in market share – as seems to be suggested by Sara Lee’s recent results – it looks like the major food producers really have little choice.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
Customers who bought this item also bought
United States Food and Drink Report Q1 2012
Ukraine Food and Drink Report Q4 2010
Chile Food and Drink Report Q4 2010
Baked Goods - Global Outlook
Meat (Fresh And Processed) - Global Strategic Business Report
United States Food and Drink Report Q2 2011
Italy Food and Drink Report Q4 2011
Recessionary Strategies for Food and Drinks Companies: The Impact on NPD, Price Architecture and Future Developments
Bakery Products - Global Strategic Business Report
Romania Food and Drink Report Q1 2012
|
|
|
|
