In this Power to the Pricing People episode, we share insights into demand pricing. We take a look at how volatile supply chains and fluctuating demand can affect the price of consumer goods, from everyday items to luxury products.
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The Sriracha Hot Sauce Saga
At one end of the demand spectrum is a cult favorite condiment that can be found in homes, grocery stores, and restaurants all over the world – Sriracha hot sauce. While many brands produce the product, Huy Fong Foods is the most famous and has seen demand for its iconic bottles skyrocket over the last decade.
However hot sauce lovers are feeling the heat at the moment. Hoy Fong Foods have been facing supply issues for the last two years, including a global chili pepper shortage, meaning sauce production can’t increase to keep up with the ongoing high demand. This has led to supermarket shelf shortages and some retailers selling two-packs for the spicy price of $86. With grocery stores and restaurants running at low supply, it’s looking like bland times are on the horizon for hot sauce enthusiasts.
Diamonds – The Shifting Desires
At the other end of the scale, diamonds might be a girl’s best friend, but demand has plunged as a growing number of environment and wallet-conscious buyers are increasingly opting for lab-grown stones instead.
With economic headwinds eating into luxury spending, major diamond miner and retailer De Beers has cut prices for some stones by more than 40% in an effort to claw back volume.
The Universal Volatility
While Sriracha and diamonds might be extreme cases, price volatility has been one of the defining characteristics of the decade so far across almost every industry.
In the last quarter, some of the world’s biggest consumer goods manufacturers who implemented hefty price rises to offset rising costs have declared that they’re putting the brakes on price increases. While this might be welcome news for cash-strapped shoppers, it could be another reactionary move that causes trouble further down the line.
Take Control with Flintfox
Whether your business is responding to supply shortages, fluctuating costs or dips in demand, you need a proactive approach to pricing that allows you to level off the highs and lows enabling you to make informed pricing decisions and stay on the front foot.
Our CEO John Moss will be speaking at the EPP Global Pricing Forum in Brussels from 9 – 10 November, exploring how digital transformation in pricing can help you regain control of your profit margins, preventing the negative impact of market fluctuations. If you’re searching for a long-term stable approach to managing your bottom line, register your attendance and talk to us.