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...

 

U.S. Food Supply Is Under Pressure

Empty shelves sure don't reassure hungry shoppers, that's for sure. 

At WSJ, "Parents Want Schools to Be Open. Schools Are Struggling to Comply":

.@MelissaTweets Remember we were talking about hoarding/no supplies of water in March 2020 (at my Costco, for example)? Well, here’s my local Ralph’s this morning, MLK Day, January 17th, 2022. Short supply: 💧 💦 💧 pic.twitter.com/ktSJaa8Xv3

— Donald Douglas 📘 (@AmPowerBlog) January 18, 2022

The U.S. food system is under renewed strain as Covid-19’s Omicron variant stretches workforces from processing plants to grocery stores, leaving gaps on supermarket shelves.

In Arizona, one in 10 processing plant and distribution workers at a major produce company were recently out sick. In Massachusetts, employee illnesses have slowed the flow of fish to supermarkets and restaurants. A grocery chain in the U.S. Southeast had to hire temporary workers after roughly one-third of employees at its distribution centers fell ill.

Food-industry executives and analysts warn that the situation could persist for weeks or months, even as the current wave of Covid-19 infections eases. Recent virus-related absences among workers have added to continuing supply and transportation disruptions, keeping some foods scarce.

Nearly two years ago, Covid-19 lockdowns drove a surge in grocery buying that cleared store shelves of products such as meat, baking ingredients and paper goods.

Now some executives say supply challenges are worse than ever. The lack of workers leaves a broader range of products in short supply, food-industry executives said, with availability sometimes changing daily.

Supermarket operators and food makers say that overall supplies are ample, despite the continuing labor shortages and difficulties transporting goods. They say that shoppers will find what they are looking for, but may have to opt for different brands.

Eddie Quezada, produce manager at a Stop & Shop store in Northport, N.Y., said Omicron has stretched his department more than any previous wave of the pandemic, with one in five of his staff contracting Covid-19 in early January. Deliveries also have taken a hit, he said: Earlier in the month he received only 17 of the 48 cases of strawberries he had ordered.

“There is a domino effect in operations,” Mr. Quezada said.

At a Piggly Wiggly franchisee in Alabama and Georgia, about one-third of pickers needed to organize products and load trucks at the grocery chain’s distribution centers were out sick in the first week of January, said Keith Milligan, its controller. The company has been struggling to get food to stores on time due to driver shortages and staffing issues that haven’t improved, Mr. Milligan said, leaving Piggly Wiggly to change its ordering and stocking plans daily in some cases. Frozen vegetables and canned biscuits are running low, he said.

In-stock levels of food products at U.S. retailers hit 86% for the week ended Jan. 16, according to data from market-research firm IRI. That is lower than last summer and pre-pandemic levels of more than 90%. Sports drinks, frozen cookies and refrigerated dough are especially low, with in-stock levels in the 60% to 70% range. In-stock rates are lower in states such as Alaska and West Virginia, IRI data show.

“We were expecting supply issues to get resolved as we go into this period right now. Omicron has put a bit of a dent on that,” Vivek Sankaran, chief executive of Albertsons Cos., said on a Jan. 11 call with analysts. He said the Boise, Idaho-based supermarket giant expects more supply challenges over the next month or so.

Similar challenges at packaged-food and meatpacking plants mean that shortages could linger, industry officials and analysts said. The Agriculture Department showed cattle slaughter and beef production over the week of Jan. 14 were down about 5% from a year earlier, with hog slaughtering down 9%. Chicken processing was about 4% lower over the week ending Jan. 8, the USDA said. Labor shortages are also affecting milk processing and cheese production, according to the agency.

Because it often takes weeks for meat to reach store shelves from the plants, the current Omicron-related labor problems at producers could prolong supply issues, said Christine McCracken, executive director of meat research at agricultural lender Rabobank. “This might mean less meat for longer,” she said.

Lamb Weston Holdings Inc., the top North American seller of frozen potato products, said in January it expected labor challenges to continue affecting production rates and throughput in its plants, where staffing shortages have already disrupted operations. Conagra Brands Inc., which makes Birds Eye frozen vegetables and Slim Jim meat snacks, said earlier this month that more of its employees have been testing positive for Covid-19 at a time when elevated consumer demand already is outpacing the company’s available supplies...

Keep reading.

 

American Express-Costco Divorce Shakes Up Credit-Card Industry

This is interesting, at WSJ, "Costco Cards Account for One Out of Every 10 AmEx Cards in Circulation":

American Express Co. and Costco Wholesale Corp. are ending their 16-year relationship, a surprise move that pummeled AmEx’s stock price and will trigger a major upheaval in the card industry.

The unusual partnership, in which Costco exclusively accepted AmEx cards, had driven a significant chunk of business to the New York card company. In addition, AmEx and Costco issued a credit card together that could also be used at other merchants. When the arrangement ends next year, millions of customers will be forced to use a different credit card when shopping at the wholesale store.

The failure to agree on new terms was a fresh blow to AmEx, which was already falling short of some sales targets. American Express Chief Executive Ken Chenault said the move, affecting roughly one in 10 AmEx cards in circulation, would eat into the company’s results in the next two years.

On Thursday, AmEx’s shares dropped $5.53, or 6.4%, to $80.48, its largest one-day percentage decline since August 2011.

The move sets up a race among credit-card firms to team up with the fast-expanding wholesale club, which sells everything from car tires to smoked salmon...

More.