CPG Companies Lean Into Promotions

In the 12 months that ended in June in the U.S., 28.6 percent of products sold were part of a promotion, including discounts, coupons, and/or spending on special placement, up from 25.1 percent three years ago, according to research from NielsenIQ, reports Financial Times. Many companies are working to maintain margins as shoppers become more frugal.

The number of promoted items in U.S. stores has increased by 6.3 percent year-on-year as the power of manufacturers and retailers to raise prices has been somewhat "depleted," said Carman Allison, VP at NielsenIQ.

“Consumers are voting with their wallet. If your price goes up too aggressively, a lot of times consumers will switch brands. They will switch stores,” she said.

General Mills is spending 20 percent more on coupons in its new fiscal year in an attempt to “sharpen” some of its price points, said brand CEO Jeff Harmening in a meeting with analysts, according to the report. Similarly, Mondelez noted a particularly challenging year ahead with lower-income consumers, according to CFO Luca Zaramella.

He said that, as store-brand competition threatens its Chips Ahoy brand, Mondelez is reducing prices below $4 for certain larger sizes. Full Story (Subscription Required)