Grocery Store Inflation Ads: “Inflation Wrecked My Grocery Budget”
““Inflation destroyed my grocery budget before I found this. I’m way too busy to cook every night.””
That’s the opening line of an online video ad from Factor75, a food delivery company that specializes in bringing fully prepared, diet-friendly meals to customers’ homes.
Rex nutting: This is where inflation came in 2021
Factor75 is using inflation fears in its latest advertising campaign to steer consumers away from grocery stores and towards its subscription service. The company suggests that US grocery store prices are being hit hard by inflation, which is backed up by the latest inflation data. But it’s not entirely clear that ready-made services are free from supply chain issues, nor the increased demand for home dining in the pandemic era, and other factors that are driving grocery bills sky-high.
Consumer prices rose 0.5% in December, pushing annualized retail inflation down to a near 40-year high of 7%. One particular area of price increases over the past year has been in grocery stores. Americans pay 15.2% more for beef, 20.7% more for eggs, and 5.9% more for milk.
See: Powell paints a soft landing picture, saying the Fed can cool inflation without hurting the job market
Factor75’s most popular subscription option includes eight meals per week for $12.38 per meal per person, more than most consumers would spend per meal from store-bought groceries.
See Also: Why Your Favorite Grocery Store Products Suffer From ‘Shrinkage’
“There’s a long history of companies using ‘inflation’ in their advertising,” said Doron Gerstel, CEO of Perion, a global advertising company that runs ads across multiple platforms, including digital and TV, in an email to MarketWatch. “It just hasn’t happened lately because we’ve been in such a low inflation environment.”
“However, in the 1970s and 1980s we constantly saw advertisements promising ‘inflation-busting prices’. It’s ethical if the offers are legitimate, and it can be effective for a while. Once everyone starts making the same statement, it becomes wallpaper,” Gerstel continued.
Factor75 representatives did not respond to MarketWatch’s request for comment on this story.
Factor75 is similar to meal delivery companies HelloFresh and Blue Apron APRN, +3.14%, but delivers fully prepared meals instead of ready meals. During the COVID-19 pandemic, food delivery companies have seen an intermittent surge in demand as more people than ever restricted travel outside of their homes.
In 2020, the US subsidiary of German-owned Hello Fresh acquired Factor75 Inc. for up to $277 million.
From the archive (August 2018): People like meal kits, but their business model is not sustainable
Jeremy Siegel, a finance professor at the University of Pennsylvania’s Wharton School of Business, said this week that US inflation is mainly being caused by “too much money chasing too few goods.”