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Grocers Want Increased Trade Allowances, Price Stability

As I was typing up the announcements of higher-than-expected profits and/or earnings at major packaged-goods companies Wednesday, coupled with reports of a consumer-credit squeeze and grocery shoppers' intentions to purchase more private-label goods, one thing crossed my mind: How can this be?

It turns out that Wally, my ever-practical and accommodating A&P manager, and his peers and bosses have been asking the same question. Julie Jargon and Cecile Rohwedder report that retailers, too, "find food prices hard to swallow" and are "demanding change." Some are rejecting price increases; others want increased trade allowances so they can promote twofer deals.

Maybe they're not yelling loud enough. Kellogg CEO David Mackay claims he hasn't seen a dramatic shift in the way retailers are negotiating on pricing and promotions, although he allows that "there's a heightened sensibility to the pressure that consumers are under." While supermarkets are reluctant to publicly discuss supplier relations, Jargon and Rohwedder say, they're telling analysts they're taking a tougher stance with food makers.

By the way, Unilever today reports a 63% jump in worldwide earnings, according to the AP



Read the whole story at Wall Street Journal »

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