Packaged-food companies may take the hint soon. With consumers still not stepping up to the plate, revenue at the likes of Campbell Soup and H.J. Heinz is expected to rise just 3% next fiscal year, according to consensus estimates. Meanwhile, big retailers like Wal-Mart Stores continue to exert leverage on food companies, capping price increases.
That may force some firms to take a step many have been skittish about in the past: join forces with competing firms to improve their purchasing power. The benefits could be crucial after companies run out of ways to cut costs internally. Campbell, for instance, plans to cut its number of soup ingredients to 500 from 917. Once completed, it would be tough to go further.
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