Retailers, consumers and prices
Just how “wonderful” consumers think your brand is can help your stock price, especially in a recession, according to a study by market research agencies Kadence, Brand Care and So What Research.
The study looked at consumer perceptions of 650 leading U.S. brands and found there is a link between the affection consumers hold for a brand — or the “wonderfulness” of the brand – and its stock performance.
According to the study, the ten most wonderful brands in the eyes of U.S. consumers are (in descending order) Hershey’s, Google, Sony, Kraft, Crayola, Kellogg’s, Scotch Tape, Wii, Rolls Royce and Johnson & Johnson.
LiveActive cheese, which contains probiotics to help improve regularity, did not do the business the company wanted.
Both food makers cut their profit forecasts for the current year, citing the pain they expect from the stronger U.S. dollar decreasing the value of sales from international markets.
Wal-Mart is partnering with Feeding America, the largest charitable hunger-relief organization in the United States, to provide 70 million meals annually to families and individuals who are struggling to put food on the table during the toughest economic downturn in decades.
The move from the world’s largest retailer comes as U.S. food banks are seeing donations fall short of demand.
Both Kraft, the largest North American food maker and Kellogg, the world’s largest cereal company, posted third-quarter profits that topped Wall Street’s expectations thanks to price increases and new items. The results are yet another nod to the fact that while you may shun clothes, jewelry or furniture during crunch times, you still gotta eat.
But Chief Executive Irene Rosenfeld of Kraft, with brands from its namesake cheese and Maxwell House coffee to Oreo cookies and Toblerone chocolates, warned that tight credit conditions could cause some retailers to liquidate their inventories, which could affect product shipments in the fourth quarter.
Check out Kraft’s new international strategy.
Sanjay Khosla, the president of Kraft International, gave Reuters a sneak preview of the strategy, which is being unveiled today at an analyst conference.
The focus is on 10 countries or regions: Brazil, China, Russia, southeast Asia, Germany, Australia, the United Kingdom, Italy, France and Germany.
The focus is also on 10 brands, including some expected ones, like Oreos, and some that could be surprising to U.S. consumers: Tang and Philadelphia. The breakfast drink and the cream cheese are big brands overseas.
Khosla, a former Unilever executive, was hired by Kraft in 2007 to boost a flagging international business. Month later, the company acquired Danone’s cookie and cracker business.
Khosla stressed that Kraft is not forcing its practices on the Danone business, but taking the best of both companies.
“We don’t Kraftize Danone and we don’t Danonize Kraft.”
Kraft is also allowing its local managers more freedom to make decisions based on local tastes, at least within reason, Khosla said.
“What you can’t do is come up with a pink Oreo,” he said.
Also in the basket:
Coca-Cola buys Chinese juice maker for $2.5 billion
Wal-Mart upbeat on Asia drive amid U.S. woes
Wal-Mart has been cutting prices ahead of key events this past year, like Black Friday, Christmas and the Super Bowl, to drive shoppers into its stores.
Now the world’s largest retailer is cutting prices on baked beans, barbecue sauce and patio furniture, betting the big event in many shoppers lives this summer will be a “staycation” — a vacation basically spent at home.
Check out soft-drink makers offering a smaller gulp.
Beverage Digest reported last week and the Wall Street Journal reported today that Coke and Pepsi bottlers are testing new bottle sizes in convenience stores to try to boost soda sales. (Both links need subscription to see the full story)
Both bottling systems have tests of 16-ounce and 12-ounce bottles, being sold alongside the familiar 20-ounce bottle.
One reason for the test is to get the price of a bottle back below $1.00. “The price points have gotten too high,” one Pepsi bottler told Beverage Digest.
Some consumers also think a 20-ounce bottle is too large, Beverage Digest said.
A Coke spokesman told the Wall Street Journal that the the test is part of a broader plan to increase soda sales by improving packaging.
Package improvements have become all the rage in the consumer products industry, as a combination of economic and environmental concerns have caused companies to rethink how they package their products.
Kraft Foods, for example, has revamped some of the packaging for products, including mayonnaise, making the design more attractive and also using less material, which makes the package lighter and less expensive to ship.
But back to soft drinks. If you are still really thirsty, take heart. Coke bottlers are also testing a 24-ounce bottle in some markets, according to Beverage Digest.
Also in the basket:
Linens ‘n Things files for bankruptcy
Walgreen April sales hit by early Easter
Big retailers scaling back expansion plans and shutting stores (N.Y. Times)
The reports largely showed that the companies are finding successful ways to navigate the consumer spending slowdown and the commodity price surge that has raised their cost of doing business.
Check out upcoming earnings and what they might say about food costs.
Food inflation is one of many factors putting pressure on U.S. consumers. (Housing, the credit crunch and soaring gasoline prices are some of the others.) But so far, big packaged food companies have been sticking to the mantra that consumers are willing to pay a little more for their wares as long as perceive they are getting a benefit in return.
Next week promises to offer snapshots on how rising food costs may be affecting consumer behavior. That’s because both Kraft, the largest North American food company, and Kellogg, the largest cereal maker, are slated to report earnings.
Kraft gave reporters a preview this week of new products they are launching, and none seemed to be geared to consumers trying to cut back on spending.
But grocery store operators seem to know that many consumers are scrambling to pay for necessities like food these days. Both Kroger and Supervalu are offering bonuses for consumers who turn their tax rebate checks onto gift cards to be used in the store. (Those rebate checks also are expected to start coming next week.)
So the question is, are things different this time around? Will the rising cost of fuel and food and an economy that might be in recession cause consumers to trade down to store brands and other cheaper alternatives?
Also in the basket:
Rising food prices are “global crisis”: U.N. chief
Charming Shoppes exploring alternatives on non-core assets
Protest-hit Carrefour cancels China sales plan
Plastic bottle scare is a boon for some (N.Y. Times)