CPG Manufacturers Show Price Declines of 1.6% in 2016

In tandem with lingering deflation that continues to compound competitive pressures, consumers paid less for grocery items in 2016, affirms the latest data from Price-Trak, an Albany, N.Y.-based market research company specializing in price and trade promotions for 150 standard categories.

Overall, manufacturers softened their list prices by 1.6 percent within the total CPG area, as tracked by Price-Trak, whose data was collected from a broad panel of retailers and which examined the same UPCs between years, totaling more than nearly 90,000 unique items examined. List price is the price at which manufacturers sell their items to the retail trade and provides the most accurate view of trade pricing vs. retailer shelf pricing, which can include various promotional allowances.

The overall decline was primarily driven by much lower trade pricing in the refrigerated and frozen segments, -5.4 percent and -8 percent respectively. "These are huge price declines being implemented by manufacturers and should help drive sales, especially in the center store frozen foods area, which is good news for many supermarkets because it should help with foot traffic," noted Andy “Dewey” Rumpelt, president of Price-Trak.

Rumpelt said prices increased in several segments, including shelf-stable beverages, the average cost for which rose by 2.2 percent, primarily driven by higher coffee costs. Wetter-than-normal weather also impacted fruit production and ingredients in many beverage items.

There is good news for meat lovers, though. Lower grain cost and fatter, plumper cows led to lower prices in meat, which translated to suppliers reducing prices they charge retailers, which then pass it along to the consumer. 

Frozen meat was down 18 percent and refrigerated meat declined 8 percent. Another category with a huge decline was refrigerated eggs, down 10 percent. The egg category has rebounded from the bird flu outbreak in 2015, which decimated egg production.

“What was interesting,” Rumpelt continued, “is that frozen food prices were down across all eight of the frozen categories we track, and suggests that manufacturers are focused on the price-to-value equation for the shopper.”

Other categories where noticeable price declines occurred include canned fish, 8 percent; and frozen desserts, 8 percent. Among the categories where price increases were seen included several household categories like laundry treatment, dishwashing and oven cleaners.