Last summer, it seemed there was no end in sight to higher prices for petroleum-based and food products. Prices on some commodities have since tumbled and consumers are paying less at the gas pump. Yet the drop in prices hasn't carried through to grocery retailers. This topic was recently explored in a Dow Jones Newswire report which suggests that some manufacturers would prefer to keep the current pricing system in place because of economic uncertainty. But manufacturers hope to pass temporary savings along to consumers in the form of coupons and other special discounts. This position means that grocery stores will not benefit anytime soon from price changes. Industry watchers predict that the strained negotiations may continue until the second half of 2009.
In the meantime, agencies may benefit from working with manufacturers to develop materials for the expected surge of special trade promotions. Have you asked your food manufacturing clients about the kinds of promotions they plan in the next few months?[Source: Ziobro, Paul and Cordeiro, Anjali. "Grocers, Vendors Tussle on Price and Promotion," Dow Jones Newswires, January 2009]