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Pricing On Our Mind

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Expo West technically starts tomorrow night, but with a show this large and comprehensive, there are shows before the show... which helps to explain why I'm here early.

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Among the ones we'll be checking out are Supply Expo, Nutracon, the Healthy Bakery Seminar and the Fresh Ideas Organic Marketplace. While each one focuses on a specific area of the health and wellness business, they're also intimately connected: Supply Expo devotes itself to ingredients and manufacturing processes; Nutracon covers the vitamin and supplement supply part of it; Healthy Baking gets knuckle deep in trends and best practices in, well, healthy baking; and the Organic Marketplace — the one under the big tent in the Marriott Hotel parking lot adjacent to the convention center — is dedicated to organic products.

The Main Event itself is expected to be another sellout, with more than 3,000 exhibitors and 56,000 attendees. There's been a lot of talk about the effect of inflation and higher commodity and fuel costs on the price of food. Just this week, Tropicana announced it would be reducing the size of its 64-ounce orange juice containers and raising prices on gallons. Many companies — from PepsiCo (Tropicana's parent) to Kraft — are anticipating trouble ahead.

The impact on natural and organic will be a big topic of discussion, for what happens on the conventional area of the business surely has an impact on the specialty, health and wellness categories. On the plus side, the spread of products across more categories helps keep volume to sustainable levels, and that in turn allows manufacturers and retailers to get a better handle on pricing. Natural and organic private labels have also caught on and have become perfectly acceptable alternatives to many consumers who might still be on a budget (and many are).

On the negative side, price inputs are going to put pressure on manufacturers in a more severe manner than conventional ingredients would, because there are still supply side issues where demand outstrips availability. Many parts of the industry are still playing catch-up to the boom years, and many farms that might have transitioned to organic are just now coming on line after three years of increasing compliance.

Of course, demand could drop again, which would be a big blow to an industry that's rebounded quite nicely with 4.5% real growth over the past year. Skittish shoppers might pull back if they see prices in the aisle going up. There's already a lot of fear about the impact gas prices will have on the economic recovery.

Yet, this is one show that shines with commitment, passion and vision. The people and businesses here have heard all the arguments about pricing; they know the tale. Let's see what's said this year.

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Contributors

David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Jon Springer

Jon Springer has been writing about food, food retailers and food retailing for more than 10 years, and is in his second tour of duty with Supermarket News. His prior experience includes covering the...
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Total Access blog provides on-the-floor coverage of industry trade shows.

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