Tuesday, March 29, 2022

Inflation, Shortages Push Americans to Switch Brands More Than Ever

I switched to Powerade from Gatorade, which is out of my price range now. 

Not only that, bottles now contain 28 ounces, down from at least 36. This is a longtime trend. When I was a kid my hands were too little to grasp those monster old bars of Safeguard. Now soap comes the size of a couple of Reese's.

And don't get me going about gas prices. I'm curtailing my driving, keeping it as local as possible for now. And I'm not poor, sheesh!

At WSJ, "Brand loyalty is tested as shoppers try new grocery products":

U.S. shoppers are buying what they can find—and afford.

Well-known brand names and flashy ad campaigns are no longer enough to command U.S. consumers’ loyalty in grocery stores, retail executives said. As inflation spreads and stretched supply chains leave gaps on shelves, shoppers are becoming increasingly fickle, with availability and price determining what goes into their shopping carts.

Shoppers’ new willingness to switch brands could shift the balances of power inside grocery stores. Big food companies like Kraft Heinz Co. and Kellogg Co. risk losing market share to competitors and store brands that are more readily able to fill in empty spots in store aisles, industry executives said. Supermarket operators, while grappling with shortages, said the situation is giving them more leverage with major brands and flexibility to test newer, often lower-cost products.

“We are seeing people make more choices on items because they are available,” said Tony Sarsam, chief executive officer of grocery chain SpartanNash Co. In the Grand Rapids, Mich.-based company’s supermarket aisles, Mr. Sarsam said, Tropicana orange juice lost share to Coca-Cola Co.’s Simply Orange in recent months, which has been easier for SpartanNash to stock, while Tyson Foods Inc. similarly lost share in frozen breaded chicken to Conagra Brands Inc.’s Banquet meals.

Mr. Sarsam said he and his team now are examining the variety of groceries the company sells, recently trimming the number of items it offers in cookie, cracker and salty snack sections in response to some brands’ inability to meet demand and slower sales. SpartanNash is sometimes giving more shelf space to local brands, which are better able to keep products in stock.

Tyson said it is working hard to meet high demand for its products. Coca-Cola, Conagra and private-equity firm PAI Partners, which owns Tropicana, declined to comment.

About 70% of U.S. shoppers said they had purchased a new or different brand than they had pre-pandemic, according to a survey conducted from May 2020 to August 2021 by private-label consulting company Daymon Worldwide Inc.

As consumers try less familiar names, brand loyalty for companies with supply challenges is declining, according to market research firm IRI. Brands with low availability, or in-stock rates of between 72% and 85%, have lost 0.7 percentage point of share of wallet on average, the firm said. Share of wallet, which measures brand loyalty, shows whether companies are gaining or losing buyers.

Consumers often stick to brands they know out of convenience and buy more items from names they are familiar with, industry analysts said. But shoppers are inclined to switch brands when belt-tightening if they can find a better deal. During the financial crisis, major brands across the grocery store developed lower-priced versions of their products to try to keep consumers loyal, as Procter & Gamble Co. did with cheaper versions of Tide detergent, Olay skin cream and Pampers diapers, for example.

Today, however, shoppers feel the pressure of higher prices while also facing shelves that are short on products, companies said. Those factors, in tandem, are driving more consumers to switch brands, executives said.

At 84.51 LLC, a data analysis business of supermarket giant Kroger Co., Vice President of Commercial Insights Barbara Connors said that brand switching was driven by extreme shortages and stockpiling, and that shoppers increasingly are switching to lower-cost brands including those on sale.

Production constraints are costing some food giants grocery-store turf. Kraft Heinz said in February it lost share in some supermarket categories as the company struggled to keep up with demand. Kraft Heinz had no additional comment.

Kellogg said in February that some of its cereal brands lost ground in supermarkets and that it expects to gain cereal market share in North America in the second half of the year when it can get more products back on shelves. Kellogg said that it gained market share last year in salty snacks and crackers.

“We will see market share restoration,” Steven Cahillane, chief executive of Kellogg, said on an earnings call last month. “We’re focusing first on our biggest brands.”

Some food companies said they see opportunities as more shoppers switch brands. Geoff Tanner, chief commercial and marketing officer at J.M. Smucker Co., said the maker of Jif peanut butter and Folgers coffee has benefited from being able to more consistently meet demand compared with competitors.

“There’s more to get if you can outperform,” Mr. Tanner said. About two-thirds of Smucker’s product portfolio is increasing its market share today compared with one-third before the pandemic, he said, and the company is boosting advertising...