Wal-Mart Supplier P&G to Increase Prices

One of Wal-Mart’s largest suppliers - consumer goods giant Procter & Gamble - announced today that they will be raising prices as much as 16 percent. Despite Wal-Mart’s recent incentives forcing suppliers to cut back on packaging, P&G cited increasing costs for plastic and paper as one of the main reasons for the price increase. The big question here is: Will Wal-Mart accept the higher prices? The company is notorious for bullying suppliers in to lowering prices, but Procter & Gamble is so big it might just be able to stand up to the retailer. Who do you think will win this battle? Will Wal-Mart accept P&G’s higher expenses, and if so, what does this mean for Wal-Mart’s purchasing policy? Submit your thoughts in the comments.

Procter & Gamble to Increase Prices as Much as 16% [Bloomberg News]

Procter & Gamble Co., the maker of Tide laundry detergent and Head & Shoulders shampoo, will raise prices as much as 16 percent because of higher costs for plastic, energy and paper.

The increases are the Cincinnati-based company’s steepest in at least 18 months. Procter & Gamble is betting that customers will continue to buy its Gillette shaving cream and Ivory soap rather than switching to store brands with lower prices promoted by Kroger Co. and Wal-Mart Stores Inc.

“Consumers are conditioned to expect that price increases are here to stay, and they are going to see that across the board,’’ said Peter Sorrentino, who helps oversee assets of $16.7 billion at Huntington Asset Advisors. “They will try the store brands, but if the product performance isn’t there, they will switch back.’’ His Cincinnati-based firm owns P&G shares.

Retailers will pay P&G 2 percent to 16 percent more for fabric, home and hair care, bar soaps, and health and shaving products beginning in September, P&G spokesman Paul Fox said today in a telephone interview. Commodity expenses will climb more than $2 billion this year, he said.

P&G previously added 4 percent to 8 percent to prices in the past 18 months, Fox said.

The company tries to counter as much as a third of rising expenses for pulp, used in paper, tallow, an animal fat used in soap, and oil-based products such as plastics through the reduction of distribution costs, Fox said.

``We don’t price in anticipation,’’ Fox said. ``We only price to recover costs.’’

U.S. consumers have slowed spending as costs for milk and bread increase and gasoline remains above $4 a gallon. The U.S. economy lost jobs for the sixth straight month in June, the Labor Department said last week, raising the risk that people will cut back further.

P&G fell 76 cents, or 1.2 percent, to $62.91 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have dropped 14 percent this year.

Posted by Alex Goldschmidt on Tuesday, July 08, 2008

COMMENTS

Who’s Your Daddy?

I think Wal-Mart should do the same thing to P&G;they did to Rubbermaid.  Show ‘em who’s boss!  Tell ‘em Wal-Mart ain’t takin’ no stinking price increase.  Tell P&G;to lower their prices or they’ll lose shelf space to competitors.

Come on Wal-Mart!  I know you can do it!

ScrewedbyWal-Mart in Anytown, America
Tuesday, July 08 at 04:37 PM

While no one likes to pay higher prices, I would be
willing to pay somewhat more for those P & G
products used in my household.

Suppliers should have more of a say on the pricing
of their own products, based on their own
expences.

Rob in Surfside Beach, SC
Tuesday, July 08 at 04:51 PM

“Lee Scott, concerned that Wal-Mart’s bullying of suppliers would attract Congressional action:

“The real danger you hear being talked about Wal-Mart is that Wal-Mart’s purchasing power will become so large that the impact will have a negative impact somehow on the suppliers who deal with Wal-Mart. And that we will dictate terms that are in fact bad for suppliers and anticompetitive in a sense that they won’t be able to do what they need to do for their shareholders or their employees or their other customers.”~~~~~~~~~~~~~Arkansas Democrat Gazette(Videotape from Flagler files)Note: No doubt lobbying will only CONTINUE to INCREASE between WalMart and Capital Hill in the near future.

ddrb in
Tuesday, July 08 at 05:27 PM

From the Canadian retailer that has provided the public with ‘green’ products for over 20 years, and has now opened 5 bagless superstores that do not dispense plastic bags:

http://www.newswire.ca/en/releases/archive/July2008/08/c2773.html

PART !

Loblaw Launches First Environmental Flagship Superstore in Ontario
Green Innovation Introduces Eco-Friendly Shopping and Prototype for the
Future; Organization Recognized by Ontario’s Chief Energy Conservation
Officer for Efforts in Energy Management and Conservation

TORONTO, July 8 /CNW/ - As one of the North American grocery leaders in
energy management and alternate refrigeration approaches, Loblaw continues to
lead the way in reducing its carbon footprint with the new Scarborough Loblaw
Superstore launch - its first environmental flagship store in Ontario. This
store is a continuation of Loblaw’s long-term commitment towards
environmentally responsible green retailing.
At 120,000 sq. ft., the Scarborough Loblaw Superstore will soon be the
largest food retail store to be LEED (Leadership in Energy and Environmental
Design Green Building Rating System)-certified in Canada - and a prototype for
future Loblaw Companies Limited stores across Canada.
“We are excited about the innovative approaches that we have successfully
implemented in this store,” said Mark Schembri, V.P. Loblaw Companies Limited.
“Undertaking the LEED accreditation process for the store has resulted in many
new, environmentally-friendly design approaches that we will also incorporate
in future stores.”
To remove the heat from chilled and frozen display fixtures, traditional
grocery stores utilize a significant amount of refrigerant gas. When these
refrigerants leak they cause greenhouse gas emissions. The Scarborough
Superstore, through alternate design approaches, has reduced this refrigerant
charge by 85%. The store is the first low temperature secondary CO2 system in
Canada and the largest in North America. This will cause an estimated
reduction to the store’s carbon footprint of 15%.
To reduce the energy associated with store heating, the retail sales area
of the store will be entirely heated in the winter with recycled heat that is
rejected from the refrigeration system. This will result in further reducing
the store’s carbon footprint by 7%.
“Residents around Scarborough will now enjoy shopping at a local Loblaw’s
store that is truly unique, the first-of-its-kind, energy-efficient and great
for the environment,” said the Honourable Gary Lunn, Minister of Natural
Resources. “Our Government is proud to have partnered with Loblaws, and to
have provided expertise for this new refrigeration technology. This new
technology will help to reduce greenhouse gas emissions significantly compared
to conventional stores.”
“Loblaw is changing the face of Canadian grocery retail with their
Scarborough Superstore,” said Peter Love, Ontario’s Chief Energy Conservation
Officer, who today presented the organization with a Certificate of
Recognition for the company’s efforts in energy management and conservation.
“I hope the energy efficiency initiatives incorporated in the heating, cooling
and lighting systems will inspire other retailers to make similar changes.
This will reduce the amount of wasted energy, limit our collective greenhouse
gas production and ultimately grow businesses’ bottom line.”
At the Scarborough Superstore, consumers will enjoy the benefits of a
wide choice of recyclable bag offerings from cloth to bin, secure bicycle
racks and alternative accessibility through public transit - in addition to
Loblaw’s superior range of grocery items from fresh to frozen, including house
brand President’s Choice (for Green, Organics and Blue Menu lines), a new
extended selection of ethnic food offerings and the latest looks from Joe
Fresh Style.

Alex in Ontario, Canada
Tuesday, July 08 at 05:37 PM

PART 2

Quote - Natural Resources Canada

<<
Other eco-friendly items incorporated in the store include;
- Motion-activated LED lighting in Freezer cases to cut energy usage
by an estimated 50% - The lights will activate when the customer
enters the aisle.
- Electricity demand response system that reduces the stores
electricity consumption based on the demand on the provincial grid -
When the provincial demand for electricity peaks, Loblaw will
automatically reduce its energy consumption.
- Multiple waste diversion streams to meet Loblaw’s 70% waste diverted
from landfill target - One diversion involves collecting grease from
cooking chickens in the stores and converting it to bio-diesel to
fuel trucks.
>>

About LEED Certification

The Leadership in Energy and Environmental Design Green Building Rating
System encourages global adoption of sustainable green building and
development practices through the creation and implementation of universally
understood and accredited criteria. LEED is a third-party certification
program and the nationally accepted benchmark for the design, construction and
operation of high performance green buildings.

About Loblaw Companies Limited

Loblaw Companies Limited is Canada’s largest food distributor and a
leading provider of general merchandise, drugstore and financial products and
services. Through its various operating banners, Loblaw is committed to
providing Canadians with a one-stop destination in meeting their food and
everyday household needs. This goal is pursued through a portfolio of store
formats across the country. It also offers one of Canada’s strongest control
label programs, including the unique President’s Choice(R) and no name(R)
brands. Loblaw is one of the largest private-sector employers in Canada,
employing over 139,000 full-time and part-time employees.

About Project Partners

Natural Resources Canada (NRCan) champions innovation and expertise in
earth sciences, forestry, energy and minerals and metals to ensure the
responsible and sustainable development of our nation’s natural resources. By
developing policies and programs, NRCan strives to enhance the contribution of
the natural resources sector to the economy and improve the quality of life
for all Canadians. NRCan’s CANMET Energy Technology Centre is the Canadian
leader in clean energy research and technology development, working with the
energy industry, academia and environmental stakeholders to develop, test,
demonstrate and deploy clean energy technologies.

Alex in Ontario, Canada
Tuesday, July 08 at 05:39 PM

everyone else buys from these same suppliers and we dont hear any complaining from you wm haters on that.why?

m att hew vantress in gresham,oregon
Wednesday, July 09 at 04:36 AM

500 Walmart bucks* says our favorite grammar-phobic shill didn’t even read the article before posting his ‘everybody else does it!’ cut-and-paste scribble.

I look forward to seeing Walmart and P&G;duke it out.

Foxtrot

----
*Walmart bucks are not legal tender.  Prohibited where void.  Void where prohibited.  Prohibited and void everywhere else.

Foxtrot in Waukesha, WI
Wednesday, July 09 at 07:05 AM

I’m only making bets in Walmart bucks from now on. Those sound awesome.

*Walmart bucks are not legal tender.  Prohibited where void.  Void where prohibited.  Prohibited and void everywhere else.

Ruth in
Wednesday, July 09 at 08:51 AM

I heard they(WalMart bucks) were printed in China.

ddrb in
Wednesday, July 09 at 09:27 AM

Ultimately to be denominated in time, to further straitjacket labor. Crash or continue unification of national currencies for the worldwide exchange rate which for evermore manufacturing is based around (China) $.40/hr labor. The excuses will sing from a contrived demand. The scales of trade continue to change.

SanDiegoView in
Wednesday, July 09 at 11:13 AM

P&G;finds the best part of waking up,is $3.3 in your cup~~~~~~~

“Coffee is one of those items that bring people into the grocery store, and Folgers has a 35 percent share of the coffee market, said Richard Smucker, president and co-chief executive, and great-grandson of company founder Jerome Monroe Smucker. With retail coffee sales topping $8 billion nationally, “there’s room for more than two or three players,” he said.

He said he told P&G;officials back in 2002, after Smucker bought Crisco and Jif, that “If you’re ever thinking about selling Folgers, please give us a call.”

Folgers has a lot of brand equity, meaning “a lot of people recognize it and a lot of people still have positive associations with it,” said David Urban, professor of marketing at Virginia Commonwealth University in Richmond. He said Smucker wouldn’t have bought Folgers unless it was planning to invest in promoting and cross-marketing the brand.

By acquiring Folgers, its first brand with $1 billion in sales, Smucker will nearly double in size and extend its reach into yet another aisle of the grocery store.

The all-stock transaction, valued at $3.3 billion, is expected to close in the fourth quarter. Smucker will assume about $350 million of Folgers debt and pay shareholders a one-time special dividend of $5 per share as part of the deal.

P&G;, which in January had announced plans to spin off Folgers and a handful of smaller brands, will exit the coffee business.~~~~~~~~~~ June ‘08,Cleveland Business News,J .Cho~~~ Note:$3.3 Billion stock transaction and $350 million debt assumption and P&G;prices are STILL expected to jump 18% Out with the TIDE......

ddrb in
Wednesday, July 09 at 11:58 AM

Correction: Expected to jump 16%?

ddrb in
Wednesday, July 09 at 12:02 PM

“Consumers are conditioned to expect that price increase"~~~~~~~~~~ “Conditioning”....Ah,yes, the “economic shock and awe “is going according to plan.

ddrb in
Thursday, July 10 at 03:01 PM

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