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Lower-Income Food Consumers Targeted

February 15, 2015
Plain English Version

consumersThe food business is changing. Companies have to follow their customers. Changing habits in the U.S. are driving buyers to fresh food, locally grown food and organic food.

Big food companies like Kraft, Kellogg’s, General Mills and Campbell’s have to find new ways to market their products. They have always been aimed at lower-income customers.

Now they are changing their packaging.

The companies are also selling to the smaller dollar, discount stores, and gas stations as outlets for their products.

Sales at supermarkets have been flat. Dollar stores have been an exception. Chains like Dollar General are adding more room for food. General Mills’ sales at discount stores rose by nearly 10 percent last year.

Companies are finding new ways to increase profits. One method is to sell the food in smaller packages. It looks like it costs less. However, the products are more expensive on a per ounce basis.

For example, a package of Velveeta Shells & Cheese at a Dollar Tree store in New York City. The 12-ounce package cost $2.50 (21 cents an ounce). The 2.4-ounce package cost $1.25 (51 cents an ounce). The total cost for the 12-ounce package is  more than the 2.4-ounce package. However, the cost per ounce of the 2.4-ounce package is more than twice that of the 12-ounce package.

Costco relies on bigger packages that are cheaper to make and sell. However, many lower-income customers do not have space to store large items. Consumers are also trying to limit the amount they spend each time they shop.

This is a hard choice. Wise consumers will look at the per ounce cost of the foods they buy. All families should read the labels of ingredients.

Source: The Washington Post February 7, 2015

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