When Suppliers Trade Places

Well-conceived cross merchandising and trade promotions could help keep competitors and private label at bay.

As food industry mergers and brand acquisitions mean the changing of supplier hands,  we'll probably see more pressure to rise prices for several key categories. The question is, will supermarkets absorb these costs or pass them on to the consumer? 

It is possible for companies to keep costs down by getting rid of redundancies, yet often these savings  get directed to Wall Street or private investors instead of the stores or consumers, particularly for example, if manufacturers control greater category share as a result of a deal. If this happens, dozens of categories across retail selling floors could be affected, Procter & Gamble for example is cutting back its vast brand portfolio by about half.

For P&G, the strategy will be to focus on brands with the greatest growth prospects, and sell or disband the rest. 

Meanwhile, as other CPG companies match their own brand lineups with what’s available from P&G, they should look beyond today’s financial performance. By figuring in evolving consumer buying and consumption patterns as well – and the potential these represent – they could select the strongest companion brands (that have global sales potential as well). Such holistic thinking could possibly enable the smaller companies that acquire P&G brands to leverage outsized gains. Well-conceived cross merchandising and trade promotions could help keep competitors and private label at bay.