Recalibrating Pricing

You don’t realize how much you need the time off until you take it. While many of you who know me think I’m on a permanent vacation, that really isn’t so. I just make it seem that I am. So my lovely wife, Liliane, and I spent a most restful and enjoyable 10 days in Florida over the holidays. While I thought it would be time away from beverages, a true diehard is never far from the fray, and like an old hound on the beach, I just couldn’t stop looking.

While doing the Florida thing – going around to the beach, the pool, the tennis courts, and dining out (only about half were early-birds), we still had to do the shopping. So on my treks to Publix, Walgreens, and the local equivalents of New York bodegas and mom-and-pops, I had to survey the beverage aisles for variety and pricing.

I have to say that I was taken aback by the number of brands that were on promotion. It’s fait accompli that the big guys are always on some type of pricing cycle, usually in alternating weeks, but I was shocked to see that many of the premium and super premium brands were also. I would hazard a guess that three or four out of every ten brands were on discount. It was across all categories and pricing variations. That was a startling amount.

When I returned, I wanted to see if this was just a geographic aberration, or perhaps a series of steroidal holiday specials – so I spent some time running around some Gotham Whole Foods, Fairways, and others. Sure enough, I saw the same things: same formats, different locales. Even HPP juices, one of Whole Foods’ signature categories, seemed highly reliant on promoted sale pricing. Now, I’ve always felt that the pricing was unsustainable in the long run, but the twofers and discounts were shocking. Yet, there was spacing on those marked-down shelves and the non-price promoted brands facings seemed full.

Super-premium water was in the same boat, which is a tough indication for a supposed margin creating category. If we New Yorkers had the space in our tiny apartment caves, I guarantee we would all be stocking up on the brands with this pricing. All along the shelves, juices, teas, flavored waters and more weren’t spared from having to sell at a discount. I don’t know if it is the time of year, or a new reality that “if you discount it, they will come.”

It has taken many years to achieve merited pricing for many of the beverage categories. I hope marketers and retailers can sustain the rightful margins they deserve. Right now, the consumer is the only possible beneficiary of this largesse.