Home US Expert explains why Heinz, Coca-Cola, Nestle and Hellman’s can keep prices higher than supermarket own label – and customers are partly to blame

Expert explains why Heinz, Coca-Cola, Nestle and Hellman’s can keep prices higher than supermarket own label – and customers are partly to blame

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What premium buyers pay for domestic brands is often high. DailyMail analyzed products for sale on Walmart's website

As government inflation data shows signs of cooling, many shoppers may be wondering when they will feel a reprieve at the supermarket.

But experts warn that high prices are here to stay, especially among domestic brands.

This comes after a number of big-name companies, including Pepsi, indicated that rising prices of the past two years have begun to “normalise” rather than falling.

These companies are not under pressure to cut costs because their different flavors or following mean they have less competition from private labels, experts said.

Instead, consumers only turn to off-brand alternatives for simpler products.

What premium buyers pay for domestic brands is often high. DailyMail analyzed products for sale on Walmart's website

What premium buyers pay for domestic brands is often high. DailyMail analyzed products for sale on Walmart’s website

Inflation began to rise in the United States in 2021 following the Russian invasion of Ukraine. It peaked at a rate of 9.1 percent in June 2022.

Inflation began to rise in the United States in 2021 following the Russian invasion of Ukraine. It peaked at a rate of 9.1 percent in June 2022.

Inflation began to rise in the United States in 2021 following the Russian invasion of Ukraine. It peaked at a rate of 9.1 percent in June 2022.

It’s one of the reasons Kraft Heinz sold its Planters nuts business – which had a less loyal following than its ketchup, for example – to Hormel three years ago.

Arun Sundaram, analyst at CFRA Research, said CNBC: ‘I think it will be some time before packaged food prices come down.

“The more ingredients in the product, the more pricing power you typically have.”

What premium buyers pay for domestic brands is often high. A 30-ounce bottle of Heinz ketchup, for example, sells for $4.76 at Walmart.

But the same size bottle of own-brand ‘Great Value’ ketchup currently costs $1.94 on the retailer’s website.

Similarly, a 2-liter bottle of Coca Cola would cost a customer $2.74, while a Sam’s Cola costs just $1.48.

Meanwhile, a 30-ounce jar of Hellman’s mayonnaise, made by Unilever, costs $5.98 on Walmart’s website, but the “great value” equivalent is $3.34.

Inflation began to rise in the United States in 2021 following the Russian invasion of Ukraine. It peaked at a rate of 9.1 percent in June 2022.

In January, the annual inflation rate was around 3.1 percent, above the 2.9 percent forecast by economists and still above the Federal Reserve’s 2 percent target.

Annual inflation was 3.1 percent in January, which was down from 3.4 percent in December but still 0.2 percent higher than expected.

Annual inflation was 3.1 percent in January, which was down from 3.4 percent in December but still 0.2 percent higher than expected.

Annual inflation was 3.1 percent in January, which was down from 3.4 percent in December but still 0.2 percent higher than expected.

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After a period of intense inflation, two trends can occur: deflation and disinflation.

Deflation means that prices fall directly – meaning the annual inflation rate falls below 0 – while disinflation means they continue to rise but at a more stable rate.

Late last year, Walmart CEO Doug McMillion said deflation was coming for several key grocery items.

However, the retailer appears to have already reneged on that promise.

Chief Financial Officer John David Rainey told CNBC: “There is deflation in certain categories, overall the possibility still remains, but prices are more stable than three months ago.”

Similarly, Gregory Daco, chief economist at EY, told the outlet: “You rarely see prices decline uniformly outside of recessions or deep recessions.”

In a recent earnings conference call, Home Depot bosses said prices for its items had “stabilized” rather than falling.

During an earnings conference call earlier this month, McDonald's CEO Chris Kempczinski admitted that consumers making less than $45,000 a year were spending less at restaurants.

During an earnings conference call earlier this month, McDonald's CEO Chris Kempczinski admitted that consumers making less than $45,000 a year were spending less at restaurants.

During an earnings conference call earlier this month, McDonald’s CEO Chris Kempczinski admitted that consumers making less than $45,000 a year were spending less at restaurants.

Similarly, Pepsi CEO Ramon Laguart commented on a recent earnings call that the company would not increase costs beyond “normal pricing levels.”

This year, a wave of companies have blamed high inflation for slowing their sales.

McDonald’s CEO Chris Kempczinski admitted that consumers with less than $45,000 a year spent less in restaurants.

“Eating at home has become more affordable,” he said.

‘The battlefield is, without a doubt, the low-income consumer. “I think what we’ll see as we get into 2024 is probably more attention to what I would describe as affordability.”

McDonald’s raised menu prices by about 10 percent in the U.S. in 2023 and implemented similar increases the year before.

The chain came under fire last year after one of its restaurants in Connecticut was caught for selling a Big Mac meal for $17.59.

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