February 25, 2011: 03:43 AM EST
Packaged goods manufacturers including Procter & Gamble Co., Colgate, and Clorox Co. plan to increase their prices, reduce their price-based promotions, and retain or increase their advertising budgets despite the increase in commodity prices. Buoyed by strong results for high-end products, P&G plans to raise prices to compensate for a projected $1.5 billion increase in commodity costs. Unlike their approach in 2008, manufacturers including Clorox plan to implement smaller, but faster, price increases, and accept lower margins in order to maintain marketing efforts in 2011. Food manufacturers and premium goods companies seem better positioned to weather higher prices than household and personal-care products companies; Kraft, for example, expects to increase its marketing spend by 10%, focused on its 20 power brands that include Planters, Oreo, Trident, Ritz and Oscar Mayer.
Jack Neff and E.J. Schultz , "P&G, Colgate, Clorox to Raise Prices, Marketing Spending", Advertising Age, February 25, 2011, © Crain Communications
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