Grocery stores regularly negotiate with suppliers, such as multinational food and home goods giants like Unilever and Procter & Gamble, to set prices. Those negotiations often involve grocers signaling their in-house alternatives to name-brand items in an effort to ensure competitive price levels.

Iowa-based Hy-Vee, for example, said it might mention products supplied by Topco, a cooperative of grocery stores that produces its own private-label products, in discussions with major suppliers of baked goods.

Grocery stores are increasingly testing the extent of their bargaining power this year, as consumers continue to gravitate toward grocery store «private label» products. Private labels accounted for 21.9% of total food sales at the end of 2022, Bank of America Research said on February 8, up from about 21.6% a year earlier (but below the previous level). to the pandemic of 22.4%).

Employees stock produce at a Hy-Vee supermarket in Omaha, Neb. in 2020.Nati Harnik/AP

Reynolds Consumer Products, which produces brand-name and private-label products, said in a recent earnings call that party cups, plastic wrap and parchment paper are among the categories where consumers are turning away from more expensive brands.

Clorox has said that consumers still seem to stick with its name-brand items, but acknowledged that more shoppers are opting for smaller packages to reduce their grocery bills.

“Some consumers choose to buy opening price points, because maybe that day, their wallet, they have a limited amount of money that they can spend in the category,” chief executive Linda Rendle told analysts on February 2. In other cases, consumers are buying in bulk to save per unit.

While merchants believe that changing consumer trends are strengthening their positions in price talks, it remains to be seen whether their efforts will produce lower prices for more shoppers.

Some major chains, such as Kroger, have already squeezed price concessions of suppliers in recent months, in some cases after instituting their own previous price increases – but smaller rivals have less influence in talks with food manufacturers and distributors. Grocery is already a narrowly profitable business, leaving little room for retailers to absorb price increases from suppliers without losing money, limiting their ability to avoid passing on higher costs to shoppers.

Gosch said it «expects price increases to be slow» as a result of industry-wide negotiations, but cautioned that prices overall are unlikely to «settle down» in the next six months.

For their part, executives at major providers have generally not promised price cuts. Mondelez, the snack company behind Oreos and Ritz, said last month that it had received requests for lower prices in the US, but that it «didn’t see the need» to implement discounts.

“In fact, what we’ve done in the last month is promote less to get our customer service back,” Mondelez chief executive Dirk Van de Put told analysts on Jan. 31. we are not planning to increase our promotional pressure at all.”