retail news in context, analysis with attitude

• The Food Marketing Institute released the following statement from its president/CEO, Leslie G. Sarasin, objecting to an increase in interchange fees levied by Visa: “At a time when consumers and retailers are fighting for their economic survival and just a few days after they paid their taxes, Visa’s interchange fee increases are deplorable. Interchange is, in effect, a hidden tax on every plastic transaction, fixed by the credit card companies and banks in an anti-competitive market.

“In a truly competitive market, companies offer consumers the best value for their dollar. We see this principle at work every day in the supermarket industry. Consumers deserve the same value when they use their credit card.”

FMI is one of a number of retail trade associations engaged in a protracted battle over interchange fees, which have tripled from $16.6 billion in 2001 to a $48.8 billion in 2008, despite being largely invisible to the consumers who pay them through the cost of goods and services.

• Not surprisingly, the Sugar Association sent out a congratulatory note today to PepsiCo, lauding it for introducing Pepsi Throwback and Mountain Dew Throwback, which use natural sugar as a sweetener rather than high fructose corn syrup. The association framed the argument largely in economic terms, saying that “the introduction of these two new products, using all natural sugar rather than high fructose corn syrup is a boon to local economies, supporting local sugar growers and processors. The sugar industry employs over 146,000 workers, contributes $10 billion to local economies and provides community support on the local level across the United States.”

• PepsiCo said this morning that it is offering to spend $6 billion to acquire the shares in its two main bottlers, Pepsi Bottling Group and PepsiAmericas – that it does not already own. The move would give PepsiCo control of 80 percent of is North American beverage volume and would, according to CEO Indra K. Nooyi, “significantly improve our competitiveness and our growth prospects.”

Marketing Daily reports that Frito-Lay’s SunChips brand “is rolling out compostable, organic-based packaging bit by bit this year, with a fully compostable bag due out on Earth Day in 2010.”

Crain’s Chicago Business reports that “Sara Lee CEO Brenda Barnes said commodity costs remain high and gave no indication that consumers will see price cuts in the grocery aisle anytime soon … Her statement about commodity costs runs contrary to many analysts’ expectations that prices could begin falling later this year.”

While supermarket chain executives – including Safeway CEO Steve Burd and Supervalu CEO Jeff Noddle – have been calling on manufacturers to lower their prices in response to the economic downturn, Barnes said that “pressure from grocers to lower prices is not new and that the company is always looking at ways to reduce costs and increase efficiency for themselves and grocers.”
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