(Source: Pittsburgh Post-Gazette)

By Teresa F. Lindeman, Pittsburgh Post-Gazette
Feb. 19--As the consumer world continues to shift and slide alarmingly, Pittsburgh-based H.J. Heinz Co. has strategies to keep profits going up and market share from eroding toward private label or second-tier brands.
But to hear Heinz Chairman Bill Johnson tell it, a rush to offer consumer promotions to match competitors' deals on frozen entrees isn't one of them. At least for now.
"Chasing volume in this category right now is chasing a consumer walking out the door for a period of time," Mr. Johnson told a roomful of analysts gathered in Florida yesterday to hear reports from several consumer packaged goods companies.
That may not be what retailers, or consumers, want to hear, but it is indicative of the debates going on within the food industry.
Shoppers crumpling under the pressure of rising unemployment, a weak housing market, declining investments and a general terror of what may come next have changed how and where they're shopping.
Shopper traffic and shopper frequency is down across most food, drugstore and discount channels, according to TNS Retail Forward Shopper Scape research done in October. Some people are cutting out discretionary items, while others are trading down to places seen as value-oriented such as dollar stores, limited assortment grocers such as Aldi and Save-A-Lot, or Wal-Mart.
And at most food retailers, private-label brands have gained some market share even as national brands lose some, said Jim Hertel, senior vice president of consulting firm Willard Bishop in Barrington, Ill.
Those trends put the pressure on traditional retailers to keep customers from straying, and on national brands to keep customers from both going further down the aisle or out the door entirely.
The stress is being felt.
In a TreeHouse Foods Inc. earnings discussion last week, an analyst cited several reports that branded companies were getting dropped by their retailers for being too slow to reduce prices.
David Vermylen, president of the Illinois company that makes baby food and private label soup in a plant on Pittsburgh's North Side, commented that national brands may upset retailers by sending price increases in a fax and then following up rather than talking to them first.
Meanwhile, Mr. Johnson at Heinz said yesterday that conversations between retailers and consumer packaged goods companies have gotten more difficult. "There's no doubt the tone of the discussion has been a little more intense," he said.