Branding and you are the brand, you likely have heard or seen these words before. Branding for consumer goods is for the consumer to identify with that particular brand for reasons that benefit the consumer. For the company, if consumers love the brand, they will pay and continue to pay a premium. If it works, companies make and continue to make billions. If it does not, companies have problems.

In an article by Christopher Rugaber of the Associated Press, consumers are changing the way they shop. After the COVID 19 pandemic, packaged consumer companies increased their prices and consumers paid, they love the brands and were willing to pay extra. This resulted in consumer-packaged companies reporting higher sales, higher profits as margins stayed the same or were increased. Something is changing at the grocery stores.

Consumers are switching to store-branded items or buying less snacks. Consumers have noticed shrink-flation which is the price remains the same, but the package contents have been reduced.

Samel Rines, an investment strategist at Corbu, in 2021 and 2022 many companies including PepsiCo, Kimberly-Clark, P&G, raised prices stemming from supply chain disruptions and the Ukraine-Russian war. Fortunately, many consumers received extra money from the government to tackle higher prices. That money is long spent, and an example is Unilever. The company had raised prices up 13.3% of average across its many brands (Hellman’s mayonnaise, Ben & Jerry’s ice cream, and Dove soaps). Its sales volume fell 3.6%. In 2023 prices were raised 2.8%, sales rose 1.8%.

In instances, consumers have alternatives and more are using them.

Linking to dividend paying stocks, in your homework to determine whether to buy a stock or not, you want to know can the company raise prices to reflect inflation, without losing market share and maintaining margins? It seemed in the packaged food companies the answer was yes, now we are seeing maybe not. If companies cannot raise prices, then they have to cut costs in the manufacture and distribution of their goods. Is there enough costs to cut? How will the companies boost sales – typically more advertising is required or a cost. When you see companies not being able to pass on higher prices, look for alternatives where they can.

There are more questions than answers, till the next time – to raising questions.