Some of the biggest manufacturers of packaged goods in the world, such as P&G, Unilever Plc, and Edgewell Personal Care Co., are making an embarrassing attempt to reclaim revenues in the US’s over $100 billion personal care and beauty sector by coming up with new uses for old items or through ‘Upflation‘.
What is Upflation?
During the years of rising inflation following the pandemic, consumers who were cost-aware reduced their purchases of once-essential commodities. Almost all packaged goods companies, including P&G, Unilever, and Edgewell, have reported several quarters of flat or decreasing sales volumes.
According to industry analyst Circana, merchants sold 20% fewer razor blades in 2018 than they did in 2019. During the same time frame, deodorant sales decreased by 6.5%. Bread, milk, and other salty snacks are all disappearing from grocery aisles.
Giants in the packaged goods industry maintained years of revenue growth by “shrinkflationing” their products—increasing prices while decreasing package sizes. However, customers can only put up with that for so long before looking for other options.
Customers occasionally switch to less expensive options, such as Amazon Basics, the company’s house brand. Some are purchasing fewer necessities in total. Companies have devised a novel strategy to win those individuals back: “Upflation,” which involves developing new uses for items that customers have determined they no longer require as much and then raising the price for them.
New Products
P&G executives had a gut feeling about how to attract consumers to their Secret, Old Spice, and Native products in the face of a general downturn in sales of antiperspirants and deodorants in the sector.
The organization intended to provide more hard facts to support the narratives it had been hearing for years regarding various body scents. “Most people are reluctant to discuss money. Individuals are reluctant to discuss death.
The reduction in need is a widespread occurrence. Just like their US counterparts over the last two years, European consumer packaged goods manufacturers Unilever and Reckitt Benckiser Group Plc have recorded repeated quarters of unit sales pressure. According to official data, China’s retail sales of everyday use items have decreased from double-digit growth prior to the epidemic to low single digits this year as the country’s development in disposable income has slowed.
Just an American Problem!
However, upflation appears to be mostly an American issue thus far. For its Dove brand, London-based Unilever, for instance, debuted an all-over body deodorant this May, but only for US customers. People in China are leaning toward multipurpose products to get more for their money.
Kellogg’s is among an increasing number of Americans who advocate for a low-consumption way of living. Local “Buy Nothing” Facebook groups have taken off, with members giving away unwanted items to neighbors for free. An app called Too Good To Go, which allows users to purchase food at a discount that eateries and retail establishments intend to discard, has gained a sizable following on Reddit.
Some followers of this lifestyle do so in order to save back on expenses or minimize their environmental effects, while others have realized that they don’t actually need to use things like shampoo or shaving cream as frequently as they were previously advertised, if at all.
Some businesses are attempting to simplify ingredients and reduce waste by repurposing things in an effort to appeal to the less is more mentality. Upon investigating the reasons behind a 16% decline in industry-wide retail unit sales, P&G discovered that consumers were disinclined to use Head & Shoulders on a daily basis due to its perceived medicinal or chemical-laden nature.
Following the successful development of a formula, P&G introduced Head & Shoulders Bare, a nine-ingredient anti-dandruff shampoo, to the national market in January. Additionally, it comes in a more compact bottle made of less plastic. It costs approximately twice as much as the original, at about $12.
It may seem paradoxical for firms aiming to appeal to consumers who are making financial cuts that these things are so expensive. However, the new applications enable businesses to position these products as luxury goods and set themselves apart from the less expensive alternatives found at CVS, Walgreens, or Amazon.
In an attempt to increase sales, food businesses were coming up with increasingly inventive ways to introduce new “occasions” for their older items. According to General Mills CEO Jeff Harmening, ice cream isn’t just for dessert; with Haagen-Dazs Bites, it can also be a mid-meal snack.
Executives from Kellogg stated that they were attempting to persuade consumers who wish to minimize costs to eat cereal for supper. During a presentation, they displayed a slide that read, “Give chicken the night off.” The CEO of PepsiCo promoted Tostitos and Doritos as a side dish.
PepsiCo is fully committed to the market for dinnertime snacks. A group keeps an eye on social media platforms such as TikTok to get inspiration for late-night culinary inventions like Cheetos dust, or Cheetle as the firm calls it, as a spice for chicken.
The goal was to produce a fourth, late-night meal, rather than just taking something that people are already doing online and selling it to them already prepared. And just like that, another chance has arisen.
Businesses are simply rephrasing their advertisements to appeal to non-consumers. Conagra Brands Inc. began promoting its Birds Eye frozen vegetables as the waste-conscious option towards the end of the previous year.
CEO Sean Connolly stated on a recent earnings call that the brand’s market share is increasing as the business highlights the benefits of frozen veggies over more costly fresh options. The business doesn’t release data on marketing effectiveness, but a representative said that the advertisements attracted new customers.
