Many companies have announced price increases of products recently to offset input price inflation. Some excerpts:
From the Q&A of Praxair’s 2011Q1 results discussion:
“ Jeffrey Zekauskas – JP Morgan Chase & Co
And then lastly, there seems to be more positive price momentum in the industrial gas business generally, but all of the industrial gas companies are quite profitable and becoming more profitable. So in your opinion, when you go out and you try to get price, what’s the primary rationale for achieving it?
James Sawyer, Praxair
The primary rationale is inflation. And so we start to see inflation. It’s much easier to get price increases. And the average customer spends less than 1% of this cost of goods sold buying gases, so nobody likes a price increase, But it doesn’t really hurt them very much. And they understand that we have inflation and power costs and so forth.”
From the Q&A of Proctor and Gamble’s 2011Q3 results discussion
Robert McDonald, P&G
“…the pricing gets executed in many different ways. Some of it is a deceleration of promotion spending and I said that we’ve seen some of that from our competition already. Some of it gets executed in new items. For example, if you buy a Fusion ProGlide, there’s a pricing impact of that versus regular Fusion. Some of it gets executed in different sizing and pricing. We’ve reduced, we’ve condensed our powder laundry detergents. We have Tide PODS going out. So this isn’t just like you walk up to the shelf and you see the same old package and suddenly the price is a little bit higher. And as a result of that, we’re able to get these price increases through. We’re able to get them to the shelf, and I actually don’t expect them to affect merchandising very dramatically at all. The key is we’ve got to continue to innovate.” Q1Conference call
From the Coca-Cola’s discussion of 2011Q1 results:
Gary Fayard, Coca-Cola
“…we recently announced our plans to raise prices on our refrigerated orange juice products in North America by 6% to 9% starting in April. As a result and based on our current and best estimates, we expect our ongoing pricing and supply chain efforts as well as our improved currency benefits to have offset almost all of the $250 million to $300 million increase in 2011 commodity costs exposure over the course of this year.
…where you downsize a package but hold the price and can get pricing as well. And you’ll see us doing that in different markets around the world as we talked about it. So, all in all, I think you’re seeing some actions that we’re taking that we think will prove good long term for the health of brands as well as build value for the company as well.
…we are expecting to see, we have talked about 1% to 2% pricing in North America. We’re now saying that we’re going to probably be going for more pricing than that this year, and a lot of that is just strictly the environment that we’re in. So that’s the way we would see it right now.”
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