From Our Print Edition

Retailers are doing a lot of greedflation — just look at their stock prices and income statements. After we had to take pricing up because our costs went up, many of the retailers that were taking a 30% margin on our products started taking 40% margin and even more. is sort of thing seems to a affect more premium brands — especially small premium brands. Natural frozen entrees shelf prices have skyrocketed.

WHY ARE UNITS DOWN? (DUH!)

Retailers are not only taking price increases to cover their own rising costs, but extra margin on the products they buy from us. Then they wonder why units are down by so much. To bring back units, they start hitting up small brands for more promotion.

The smaller, innovative brands are in less of a position to afford this for many reasons we all know. But there’s another factor nobody thinks about much: investor money. Many of these brands were backed by investors who were always telling to “grow, grow, grow.” So more money was spent on promotion to keep growing. That worked for awhile, but quicker than you can say BOGO, the investors wanted to see more profitability, and the heck with promotion. You can’t have it both ways. These smaller guys are now cutting back on trade spend to reach profitability goals for their investors, and a lot of them are getting hurt. I think you’re going to see a lot of smaller brands go out of business.  What’s worse is that the market is sapping the money out of these innovators, and that’s going to cut into the growth of entire categories.

Ultimately, the consumer doesn’t want to pay for all this behind-the-scenes nonsense. If you look at syndicated data from Nielsen and Circana, it’s not uncommon to see average shelf prices up by high double digits (or even triple digits), but units and total dollars way down. As I’ve pointed out, this is more common among the smaller, innovative brands. The big brands seem relatively  immune to the gaps I’ve pointed out here, in good part because of their deeper pockets.

Some of the smaller brands have worked (and spent) hard to keep their retailer partners in stock, delivered in full and on time during COVID. Other brands — often the larger ones — shorted retailers. Badly. But lazy buyers — or those with poor memories — don’t pay any attention to that. Our own company’s sales were up significantly during COVID. But as other brands came back, we started losing some of the share we had worked so hard to gain while competitors waited it out on the sidelines.

So what’s happening now? When we do business reviews with some (not all!) retailers, they ask us how we’ve done in the most recent 26 or 52 weeks versus the prior year. Well, we’re down a little, because we’re cycling year-ago numbers when we were doing so well, busting our butts to deliver in full and on time despite COVID and industrywide logistics difficulties. Remember?

A FERVENT WISH

Sadly, not all of them do. We’ve lost some business because they don’t remember. I know we’ll get that business back when times are tough again, although I certainly wouldn’t wish tough times on anybody. But I do wish — fervently — that this industry would return to the teamwork and partnership that made it strong in the first place.

The frozen food manufacturer cited above requested anonymity. Rebuttals from retailers — anonymous if need be — can be sent to [email protected].