“There is only one boss. The customer.”
~ Sam Walton, Founder of WalMart
Written by Bryan Lutz, Editor at Dollarcollapse.com:
Inflation affects more than prices.
It affects how the grocery gods provide our food.
Most people know this Costco grocery secret used to boost sales:
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Rotisserie Chickens are a loss leader at Costco.
They sell chickens at a loss – it gets people through the door, and buying more.
It an effective strategy.
A full chicken for $5? How can you go wrong…
Now that food prices are more expensive from inflation, people are really considering how much they spend on groceries.
So food companies know what they have to do.
They’re investing billions so you buy more.
Bloomberg reports:
A $36 Billion Deal Is a Sign Mars Sees Trouble Ahead
“But right now, Mars has a more urgent focus: lifting sales in the grocery aisle, which are under pressure from thriftier consumers and supermarkets’ private labels.
When food price inflation accelerates, as it has over the past couple years, so do the revenues of consumer packaged goods companies. This is now reversing; with less help from price increases, companies must sell more…
…Mars Inc. is happy with its purchase: the $36 billion acquisition of Pringles chips and Cheeze-It maker Kellanova.”
Because if you remember your favorite Cheeze-It’s, or Pringles (I’ll bet you can’t have just one) are on sale at a super-low price in the snack aisle, you’re most likely to buy that savory snack, then balance it out with something sweet.
Since you already got a deal, it’s no problem.
You’re only spending a little bit more.
Then Mars sells more.
This is a secondary, unseen consequence of inflation, which we are likely to see more of from the world’s biggest food companies like…
Nestle.
PepsiCo.
CocaCola.
Danone.
Walmart.
Mars.
And Tyson Foods.
Aside from the secondary negative effect of inflation, there is a third order effect.
It would be to anyone’s advantage to pay attention to these grocery gods acquiring smaller brands.
By buying up smaller brands, the grocery gods diversify and even compliment their current offering, while getting the average American to buy more.
They are also providing potential opportunities for savvy investors now, and in the coming recession.
When the purchase what announced on Aug. 2, Kellanova began to shoot up to new all-time highs.
And I don’t think it’s done yet.
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When Mars Inc. purchased Kellanova, they did so for $36 Billion, which values the stock at $83.50 per share, a 33% premium.
So, if something like pops up in the news again…
Just divide the purchase price by the number of shares. Then look at the current price.
Place an order and away you go…
I’ll be looking for them too.
And to be blessed by the grocery gods.