Food manufacturer complains about lack of demand and high costs
2023.02.25 03:11
Food manufacturer complains about lack of demand and high costs
By Tiffany Smith
Budrigannews.com – Major retailers, such as Kraft Heinz (NASDAQ:) and Conagra Brands (NYSE:) According to statements made by executives this week, Inc. are eliminating product lines in order to combat sky-high costs and decreasing consumer demand.
During the pandemic, many businesses began reducing their product lines and are now redoubled in this effort, focusing on items for which they can more easily raise prices during prolonged food inflation.
Nestle SA executives (SIX:) likewise Unilever (NYSE:) Plc claimed that by eliminating the laggards in their product portfolios, they had saved billions of dollars.
A Marie Callender’s chocolate chip cookie dough cream pie was recently discontinued by Conagra to make room for an apple pie with no added sugar, which the American food company hopes will sell more quickly.
In an interview, CEO Sean Connolly stated, “No one will have a perfect batting average.” Having more winners than losers is essential.
At the Consumer Analyst Group of New York Conference this week, Kraft Heinz executives stated that the company’s “decomplexity program” includes the elimination of less popular products. Heinz Real Mayonnaise has recently been discontinued.
NASDAQ: Mondelez International Inc. At the conference, CEO Dirk Van de Put told Wall Street analysts that the Oreo company had strict rules about replacing old products with new ones, such as “one in, one out.”
Mondelez’s top marketing executive, Martin Renaud, told Reuters that the chocolate company has “too many flavors.”
Renaud stated, “We occasionally have the tendency to launch a lot of things because they are exciting, but we need to be very rigorous.” He continued, “The addition of products at various price points by Mondelez adds complexity.” I strongly believe in simplicity.
In order to make room for new iterations of their most popular products, businesses reduce their product offerings, producing smaller versions for dollar stores and larger versions for warehouse chains like Costco (NASDAQ:). stated Deloitte’s U.S. consumer products research leader, Justin Cook. At both kinds of stores, shoppers who are strapped for cash are more likely to look for deals.
Cook stated, “It’s more expensive to make a product with a lower volume.” Companies believe it is more difficult to raise prices if the product does not perform exceptionally well and people absolutely must have it.”
According to Nestle and Unilever, the practice saved $2 billion and 1 billion Swiss francs ($1.06 billion) respectively last year.
In order to boost their own waning sales, retailers are also looking for innovative products that sell quickly. Products with a narrow market or limited popularity are most likely to be discontinued.
Euromonitor, a market research company, found that Heinz Real Mayonnaise has a small global market share.
These kinds of cuts can be jarring for some customers.
Vinh Banh stated in an email that he has been using Heinz Real Mayonnaise for deviled eggs and sandwiches for a long time. He was disappointed to learn this month that Kraft had discontinued the 2018 product. According to Banh, a 34-year-old from Garland, Texas, he is looking for any remaining jars he can find.
Kellogg, Inc. Spokespeople for both companies confirmed that Nestle discontinued Lean Cuisine paninis, frozen Sweet Earth Benevolent Bacon, and Sweet Earth Vegan Hot Dogs. Co also discontinued its line of Special K protein shakes.
Suppliers are sometimes bowing to retailers’ plans to cut back on inventory in the hope that cutting back on product lines will make stores more efficient and save them money on running and stocking them.
Walmart, Inc. told Reuters that it was looking for more data from suppliers to help justify pricing and was pushing for more creative ways to offset costs and protect consumers from price increases.
Chief Financial Officer John David Rainey stated, “We recognize that price concerns are more elevated at this point in time, but that’s where we can lean in and have data-driven negotiations with our suppliers.”
PwC partner Kelly Pedersen stated in January at the National Retail Federation conference, “I have seen a lot of reduction in inventory purchases this year.” Everyone is anticipating a slowdown.
During an earnings call this month, finance chief Graeme Pitkethly stated that Unilever, which produces Ben & Jerry’s and Magnum, is reducing the variety of ice cream it sells.
In its “Polaris (NYSE:),” the company has used artificial intelligence for more than two years. program to assist in assortment management. It credited Polaris for reducing its product range by about 20%.
Additionally, Unilever reduced approximately 5,000 categories of personal care products.
Food producers typically eliminate products without much fanfare. They showed off new products at the consumer products conference, many of which are becoming increasingly popular handheld foods that people can eat while scrolling through their phones.
That doesn’t mean that people don’t notice when a favorite item leaves the shelf.
With more than 23,000 followers, John Finn, 35, runs a Twitter page called “Discontinued Foods.”
He stated, “You’d be shocked by the personal connections and loyalty people have to food products.”
