A Non-Crude Method for Lowering Grocery Prices

A Non-Crude Method for Lowering Grocery Prices
Tags: Marketing, Merchandising, Shopper Marketing, Supermarkets & Grocery Stores
April 26, 2011

Procter & Gamble has figured out one sweet way to bottle up its leading line of shampoos – and it might just help keep prices down.

The consumer products maker is now packaging its Pantene shampoos and conditioners in bottles made primarily of sugarcane-based plastics. Traditionally, shampoo bottles – and most other bottles – are made from petroleum-based plastics. And as we know, petroleum, in addition to releasing a lot of greenhouse gases that hurt the environment, has been rising in price for the past few years.

These accelerating commodities and energy costs are in fact a chief driver of higher consumer products prices. Indeed, P&G on April 25 said it would be forced to raise prices for Pampers, Bounty and Charmin. Kroger, meanwhile, on April 26 said it is seeing a 2 percent increase in overall grocery prices, year-over-year.

Petroleum affects grocery prices from production to packaging to delivery. By reducing its reliance on fossil fuels, P&G is not only delivering on its 2008 commitment to reduce its carbon footprint 40 percent by 2012 (it has actually already achieved a 50 percent reduction), the commitment helps to diminish P&G's reliance on petroleum to make and sell its products.

It is a chief reason why P&G introduced concentrated laundry detergents in 2006. These detergents require much smaller bottles, saving an estimated 140 million pounds of packaging annually. As a result these bottles of detergent also are a lot less expensive to ship because P&G can fit more bottles per truck.

But even as major corporations reduce their reliance on petroleum, Kroger has pointed out just how important it remains to some industries.

At the April 26 analysts' conference, Kroger CEO David Dillon said that while grocery prices are up 2 percent, the supermarket chain might actually benefit from rising fuel prices. How? Because Kroger operates gas stations, and it offers discounts on gasoline at the register. And that could attract more shoppers to its stores.