As CPG brands debate whether inflation is easing or rising, Mondelēz expects more challenges ahead.
Snack giant Mondelez International, the parent company of a wide range of popular brands including Cadbury, Oreo, Trident and Philadelphia Cream Cheese, said in a conference call with analysts on Tuesday (Jan. We talked about financial results and talked about this outlook. .
“We are not in a position to say that costs are going down,” said Dirk van de Putt, chief executive of Mondelez. “If anything, they’re up compared to last year.”
The company recently raised prices in the US and is in the process of raising prices in Europe, even as price-sensitive consumers are cutting back on luxuries such as cookies and chocolates. Van de Putt notes that sales of these products are declining in Europe, and attributes the decline to “consumers feeling the recession.”
The company’s price increases are reportedly due to grocers pushing back against the brand and trying to reverse those price increases. For example, Whole Foods Market, Amazon’s premium grocery retailer, recently asked suppliers to lower wholesale prices so the chain could lower prices for consumers, The Wall Street Journal reported Tuesday (1 reported on March 31st.
Brands are divided over whether inflation is easing and prompting consumers to adjust their shopping behavior accordingly, or whether 2023 will be an even more difficult year than ever before. , continues to tighten the belt.
As for the former, spice and seasoning giant McCormick said on Thursday’s earnings call that shoppers are returning to brand names. “Medium,” he said, and the company’s lower-priced Lawry’s line is being “traded up from private labels” by consumers.
Conversely, consumer packaged goods (CPG) giant Colgate-Palmolive, as it shared on its fourth-quarter earnings call on Friday (January 27), saw flat trade-downs in some categories and weaker growth in others. We are continuing to grow. CEO Noel Wallace said many of the company’s home care products still face increasing competition as toothpaste sales have been strong compared to lower-priced store brands.
Similarly, Procter & Gamble said earlier this month that store brands’ market share would remain steady through the second half of 2022, without an increase in tradedowns or a shift in consumers back to big-name brands. .
In any case, consumer price concerns certainly remain in the back of their minds. The PYMNTS December study, “Consumer Inflation Sentiment: In It For The Long Haul,” polled more than 2,300 U.S. adults and found that consumers, on average, expected inflation to return to 2021 levels by I know you think it will take another 20 months. Additionally, about three-quarters of those surveyed are very or very concerned about the US economy.
In fact, retailers of these well-known brands (whose own-brand products represent their competitors) argue that consumer shopping behavior continues to be greatly influenced by rising prices.
“We’ve been trending with the same question: ‘How concerned are you about inflation?'” said Barbara Connors, vice president of commercial insights at 84.51°, a marketing insights subsidiary of grocery giant Kroger. In a recent interview with PYMNTS, he said:
“The mindset of having a limited budget and having to be selective about what you put in your basket will continue throughout this year.”
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