Looking back at the 2008 recession, General Mills isn’t worried about trading down to its own brand.
Executives at the food giant, which owns a variety of popular cereal, snack and soup brands, said on a conference call with analysts on Thursday (March 23) to discuss the company’s third quarter 2023 earnings results. , despite the difficult economic situation, said: Consumer spending is under pressure, and shoppers continue to choose the company’s products.
To explain this resilience, CEO Jeff Harmening recalled what the company saw during the recession of the late 2000s.
“We found that private label was able to maintain its market share even though it gained a small share from 2008 to 2010.
However, many consumers are lowering their prices. 69% of consumers have changed their recent shopping list, according to the January edition of the PYMNTS Consumer Inflation Sentiment study, “Consumer Inflation Sentiment: Perception Is Reality,” which PYMNTS surveyed over 2,100 consumers in December. It became clear that In 2019, we responded to price increases. 59% reduced the quantity of items they purchased and 35% reduced quality.
General Mills argues that most of this trade-down will be felt by lower-tier competitors rather than the leading brands.
“Obviously, private label [recessions]John Nudy, group president of General Mills’ North American retail division, told analysts. “But we’ve maintained our own share, and our share has been relatively flat. The ones that seem to be hit hardest from a share standpoint are actually his third in the category and his fourth. It’s the second tier player.”
Retailers, on the other hand, continue to argue that private label adoption has been on the rise for some time already. For example, his Kroger, a leading US grocer, is investing in brands, launching new products, and ramping up marketing.
“Our portfolio of brands allows us to offer exciting products at great value while increasing sales and improving profit margins. Inflation has impacted the lives of so many customers. “Our brand’s quality and value proposition are particularly important when it comes to delivering innovative products,” Kroger CEO Rodney McMullen told analysts in a call on Thursday earlier this month. and continue to expand the brand into more categories.”
Rapidly rising prices are causing many consumers to reconsider their purchasing decisions, and retailers are beginning to realize opportunities for private label that weren’t there before.
For example, Casey’s, the third-largest convenience store chain in the United States, said in its recent earnings call that rising candy prices are leaving room for its store brands.
“This is a great example of why private label is so important. In the candy category, many domestic brands were passing on significant cost increases to all retailers and starting to put pressure on unit velocity. Casey “This is the candy bar category, which has historically been a very difficult category to penetrate due to the brand strength of domestic manufacturers,” said Steve Bramlage, chief financial officer of the company. It gave me the confidence to enter the
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