"The consumer reality is, however, that over the last seven years, since 2002, the average price per serving of our ice cream has increased by only a nickel," spokeswoman Kim Goeller-Johnson said.
Food companies are reluctant to unwind price increases because many guessed wrong and are locked into futures -- or contracts to purchase supplies at some distant date for a predetermined amount -- that have yet to reflect the reversal in commodity prices, said Shanahan, the analyst.
Supermarket executives warn that they have the ability to retaliate by shifting more of their products to "corporate," or house, brands. "I say wait and see because we're going to chew them up on corporate brand," Safeway's Burd said.
Jack Brown, chief executive of Stater Bros., a 165-store chain headquartered in San Bernardino, said he recently received a letter from a "major manufacturer" he declined to name "outlining the next six quarters of increases. Prices will go up 4% each quarter."
To counter rising prices, Stater Bros. has increased the number of house brands it offers to give shoppers lower-priced alternatives. Over the last year, Stater Bros. has increased the size of its store-brand offerings to 21% from 17%, but Brown is reluctant to go higher.
His company uses a strategy known in the grocery business as "everyday low prices." It promotes lower prices all the time instead of having large, periodic promotions. Name-brand staples are the bread and butter of that business because their prices are easily comparable between store chains, Brown said.
Kroger, which uses a strategy based on promotions and loyalty card programs, has blunted some of the effect of increases by brand-name producers by ramping up its own manufacturing. It makes about 43% of the private-label items sold in its stores.
Kroger, the nation's largest grocer, operates 41 manufacturing plants, including 16 dairies, seven bakeries, five grocery plants, three beverage plants, three ice cream plants, three meat plants, two cheese plants and two frozen dough plants.
Corporate, or house, brands now account for 27% of Kroger's grocery sales and 34% of the units, or individual items, sold, said Dave Dillon, the company's chief executive.
Kroger's Private Selection house-brand line -- one of three tiers its stores offer -- hit $1 billion in sales last year.
Brown of Stater Bros. is hopeful that the greater reliance on house brands by the grocery chains, combined with slowing sales rates for national brands, will force the big food makers to reverse course.
"When a name brand wants to play ball and lower prices, they will find that we will be the best friend they have ever had," Brown said. And he thinks that will pay off for the national brands, his stores and shoppers. "I really believe that if you take care of a customer, the customer will take care of you."
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jerry.hirsch@latimes.com
