Wal-Mart, Campbell, Kraft and others will reduce prices to boost sales
Major brands are expected to take advantage of reduced food costs.
According to a report from the Wall Street Journal's Corporate Intelligence blog, major brands and retailers including Kraft, Campbell and Wal-Mart will seek to take advantage of lower food costs by offering deals to boost sales. Data from Nielson shows US grocery sales declining since April, with the trend expected to continue into next year.
In a conference call with investors, Campbell CEO Denise Morrison said the company ended the quarter with excess inventory on grocery store shelves, leading to the efforts at boosting sales. However, some analysts worry that commodity deflation and weak sales are a recipe for price wars at the grocery store.
Wells Fargo analyst John Baumgartner told the Wall Street Journal that the food industry "has demonstrated renewed weakness at an accelerating rate." As such, says Baumgartner, "we would not be surprised to see food manufacturers increasing the level of price promotion" over the next 12 months.