Jesse Newman of The Wall Street Journal reports that some food makers complain of a flood of obscure charges from distributors; ‘Is that price gouging or costs going up?’ Newman writes:
The price of a bag of coconut-cashew granola at Whole Foods jumped last year from $5.99 to $6.69. Why that happened defies simple explanation.
The granola maker, Wildway Foods, said the cost of making the cereal hasn’t gone up that much, and that it isn’t pocketing more profit. It jacked up the price, it said, in large part to offset fees that piled up from a little-known link in the supply chain: grocery distributors. There were charges for processing grocery promotions, others for potential spoilage and still more related to alleged shipping glitches.
Rising prices, especially in the supermarket, have vexed consumers, drawn scrutiny from regulators and emerged as a central issue in the presidential race. Donald Trump has blamed Kamala Harris and the Biden administration, and Harris has pointed a finger at grocery chains and food companies. […]
Fees and other charges levied on food makers, such as for late or partial shipments, have long been a part of the grocery business. Grocers impose many of their own fees for things like promotion and shelf space, which distributors pass on to food companies. Distributors charge extra for processing those fees, and levy others themselves.
Launching a new flavor for an existing product? There’s a fee for that. Running a promotion at retail? Distributors charge for that, too. If distributors buy too much and products expire before hitting store shelves, they can deduct spoilage fees. But if food makers short an order, aiming to avoid spoilage charges, distributors can ding them for that. […]
Deduction busters can cost food companies thousands of dollars a month, food executives said. That expense, like others, gets built into the prices that consumers see on store shelves.
“In the end, consumers pay for everything,” said Milton, the hot sauce entrepreneur.
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