On Packaged Goods and Pricing

One man’s inflation is another man’s pricing power. A report by Information Resources Inc. says revenues for consumer packaged goods (CPG) climbed 3.3 percent last year, driven by average price increases of 4.2 percent. At the same time, a difficult economy (including those darn price increases) worked to suppress demand for CPG goods in a number of sectors.

In some categories, a rise in dollar sales came in tandem with a gain in unit sales. In the tea/coffee ready-to-drink segment, for instance, revenues rose 25.3 percent on a 19.2 percent rise in unit sales. But eggs, whose price rose sharply, posted a 24.9 percent rise in dollar sales despite a 2.5 percent dip in unit sales. The dollar-sales gain for frozen pizza was nearly double the rise in unit sales (8.6 percent vs. 4.9 percent).

Some CPG segments saw revenue gains due to innovation, of all things, “particularly amon categories with health and wellness benefits, such as ready-to-drink teas and granola bars.” Consumers’ eagerness for bargains also gave private-label goods a slight uptick in market share in the fourth quarter, “following five years of relatively flat share overall.”