Wednesday, February 27, 2008

Proof of Retailer Power in Packaged Goods

Is here any doubt about how the power has shifted from manufacturer to retailer in consumer packaged goods? Just look at what happened to Cott's stock when it was reported that Wal-Mart was shifting shelf space away from it's Sam's Choice brand produced by Cott's in favor of Cadbury Schweppes beverage brands. Cott's stock dropped 20% in one day and 38% the next day when the change in shelf space was rumored. What's so striking is that the market reaction was base on the anticipated impact of a change in allocated shelf space alone, not a delisting. Smart markets, yes. Powerful retailer, absolutely.
Here's the story as reported in the Financial Post.