If you go grocery shopping or shopping in many stores, near the cashier is chocolate of one source or another. Few people have chocolate on their lists of things they need at the grocery store, but wants often outweigh needs. For the past few months, high inflation is on the minds of consumers, what are they thinking and actually doing?
In an article by Maytaal Angel and Jessica Dinapoli of Reuters, consumers are cutting back on chocolate due to the cost of living, according to executives at the world’s largest chocolate companies.
In the US, chocolate sales are down 2% to 3% according to Hershey’s VP of Investor Relations Melissa Poole. During the pandemic, chocolate sales increased.
Hershey in certain cases slims down package sizes and keeps the prices similar, known as shrinkflation to retain customers. However it not a tool that is used as often as you think it is because of the time and planning involved.
Daniel Sandler, a principal at IRI showed sales volumes of US store branded or private label chocolate a minor part of the overall market that is cheaper than name-branded chocolate grew by 8% in the past 6 months. Consumers should understand cheaper chocolate has a lower cocoa content.
At the start of the year, chocolate makers were expecting a 2.5% growth, but now are forecasting a 1% growth rate or flat or people will still buy chocolate.
Linking to dividend paying stocks, in many mature industries companies are not expecting growth but a continual movement of the deck chairs or they need to do all the good things to fight to maintain their existing market share. If they do, they stay profitable and do it all next year. Understanding growth rates in your investment companies is a good thing to know.
There are more questions than answers, till the next time – to raising questions.