Sunday, January 07, 2007

Margin pressure on food manufacturers

The Wal-Mart effect is being felt by food manufacturers:

Aggressive price cutting by Wal-Mart Stores, the world's biggest retailer, is likely to put pressure on the profit margins of food manufacturers this year.

"Looking ahead to 2007, our work suggests gross margin performance should gradually deteriorate during the year ..."
With commodity prices rising, one would expect that manufacturers would pass their cost increases along -- but not if Wal-Mart won't allow it.

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