Bad news for breakfast cereal

[BTF69]

Hy-Vee and other stores bank on you purchasing other items to make up the difference. Smart shoppers see through it and only purchase the sale items.

The old "Loss-Leader" trick

 

[dinglefritz]

Nice that you could inject your usual knee-jerk rant, but Kellogg's is shifting production to Michigan, Pennsylvania and Ontario, where big labor surely holds more sway than in Omaha.

Once upon a time, it made sense to produce cereal close to where your raw material was located. Now it's easier to concentrate production closer to where your finished products are distributed and consumed. I'm guessing that's exactly what Kellogg's is doing, and that whatever labor headaches they have to deal with are not being eased in the slightest.

So you’re saying that Omaha labor costs has nothing to do with them closing the plant? Somehow I doubt that.

 

[itseasyas1-2-3]

I feel like Doritos are a scam. They’re like 5 and a half bucks a bag at the store, but then they’re on special at $2.99, but only if you buy three bags. So the question becomes, is the store losing money at $2.99 a bag? Doubtful. Are they marking them up 100% the rest of the time? Who on here has access to wholesale pricing for snack chips? I’m really curious about this.

A good store grocery buyer is worth his weight in gold. The guys that are good are good.

So, the salesman calls on the grocery buyer with a promo on Doritos with at 2.99 price point. There might be a BOGO spiff for the store. Say the customer buys 3 bags for @ $ 9.00. They run the promo for 3-4 days or even week, but they a ton of additional stock to sell once the sale ends and then get their $ 5.50 a bag for those that didn't shop the sale, or eat a ton of those chips. The products that tend to have really good "sale" prices, typically have real good shelf code.

One thing for sure, the store grocery buyer or his top guy will almost always order the soap aisle because that's the most profitable product in the store based on volume. Sure a small specialty area may make more net profit, but the soap aisle generates the gross profit. Proctor and Gamble, Arm and Hammer, Dial Soap, etc, they do a shit load of off-invoice pricing.

Some store have a pricing rationale where they would rather sell less units and make more per purchase profit, others believe in velocity, or selling more for less money. Some grocery buyers use strictly net profit, others use gross profit as their pricing structure.

 

[itseasyas1-2-3]

M

probably a vendor sponsored sale. Meaning Doritos will give Hyvee a kickback for selling three at a time

Correct.

 

[itseasyas1-2-3]

Hy-Vee and other stores bank on you purchasing other items to make up the difference. Smart shoppers see through it and only purchase the sale items.

They are called "loss leaders". Kinda like with Miracle Whip.
Customers who only come in for the specials are called "Cherry Pickers."

 

[itseasyas1-2-3]

So you’re saying that Omaha labor costs has nothing to do with them closing the plant? Somehow I doubt that.

I haven't read the article, but are the plants they are moving too also unionized by the same union?

As I said in another thread, my son works for an international company and deals with the real internal numbers on a ton of economy/industry.

He says the overriding theme is NOBODY is spending any money now.

How many people do they employ, and is there any industry in Omaha that can absorb a large influs of people used to making top wages?

Economically speaking, things are gonna get a lot worse in the next 3 months.

 

[schuele]

So you’re saying that Omaha labor costs has nothing to do with them closing the plant? Somehow I doubt that.

I would want to spend more than five seconds looking into why the Omaha plant is closing, before bloviating about why it's happening.

 

[schuele]

I haven't read the article, but are the plants they are moving too also unionized by the same union?

In 2021, the same union that went on strike in Omaha also went on strike at Kellogg plants in Michigan and Pennsylvania (also Tennessee). Workers in Ontario would not belong to the same union, but labor costs there are very high.