While inflation’s pace is cooling, prices for many goods and services remain well above where they stood just a few years ago. That’s caused plenty of people to pare down their discretionary budget, to the chagrin of apparel and home goods retailers.
Nonetheless, people are still eating, which makes recent sales volumes declines harder to understand. TD Cowen analyst Robert Moskow argues that there are three main factors behind this trend, which he warns “will continue in 2024 unless the companies take more stringent action to lower price.” But that can’t be the whole story, as grocery store volumes are down 1.8% over the past 52 weeks, compared with an average 4.6% decline for big packaged-food companies over that time. Some big players have had it even worse: Conagra Brands , General Mills , Kellanova , and Kraft Heinz have seen their volumes fall 6% or more in the 52-week period ended September 2023.
The final 10%, Moskow believes, is from market-share loss to private label and emerging brands. Not surprisingly, private-label brand sales have continued to climb in 2023, as shoppers keep looking for less-expensive options. Big food companies’ volume growth trailed that of their categories by an average 2.3% over the past 52 weeks, and 0.4% on a four-year compound annual growth rate basis.
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