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Pepperidge Farm Inc. will join other big snack makers in phasing out packages stamped with the manufacturer's suggested retail price, according to Brandweek magazine.
Snack buyers for convenience stores and drug store chains reported that representatives from Pepperidge Farm, based in Norwalk, Conn., have said pre-priced packs will disappear by late May. The move will affect 6.25- to 7.2-ounce bags of a dozen SKUs of cookies, including Pepperidge Farm Chocolate Chunk Cookies (currently pre-priced at $3.19) and Goldfish Crackers (pre-priced at $2.19), according to the magazine.
The cookie and cracker maker needs the flexibility in pricing to keep up with the rising cost of commodities and shipping, retail channel sources told Brandweek. Other snack makers have removed pre-priced products, primarily sold in the c-store and drug store channels. Kraft Foods Inc., for example, removed the $1.99 price printed on 12 Planters products in March. Kellogg Co. will drop the 99-cent price printed on single-serve packs of Cheese-It and Famous Amos by the end of the year.
Retailers don't want to be locked into shrinking profit margins by stocking products with a suggested retail price, and they also don't want to be perceived as ripping off costumers by sticking their own, higher price tag on pre-priced products. For that reason, some retailers are resisting stocking snacks pre-priced by the manufacturer, which could jeopardize a brand's space on store shelves.
"It's a tug of war, not only over control of the [profit] margin, but over the brand perception of value," said Scott Lucas, executive director of consultancy Interbrand in Cincinnati. "Who is going to be seen as delivering value to the consumer: the product brand or the retail brand?"