Consumer packaged goods manufacturers are starting to reduce prices

Costco Wholesale Corp. here said yesterday consumer packaged goods manufacturers are starting to reduce prices, possibly in reaction to rising private-label sales.

According to Richard A. Galanti, executive vice president and chief financial officer, “The branded companies are not passing all the savings back yet, but we're starting to see them do so, which is the right thing to do — and it's great for customers.”

He suggested the CPG actions may be in response to the 300-basis-point increases Costco has seen in private label penetration relative to brands during the current fiscal year — increases Galanti pegged at 10% to 15%, compared with normal increases of 0.50% to 0.75%.

“That increased penetration of private label is equal to the decline in the sale of those branded items,” Galanti pointed out. "And until recently, the branded companies seemed content to make more money."

Galanti made his remarks during a conference call with investors to discuss financial results for the third quarter, which ended May 10. Net income fell 29% to $209.6 million in the quarter and 19.6% to $711.8 million for the year to date, while sales fell 4.8% to $15.5 billion in the quarter and 0.7% to $48 billion for the year to date. Comparable-store sales fell 7% overall and 5% in the U.S. for the quarter, and 3% overall and 1% in the U.S. for the 36-week period.

Costco Dumps Foie Gras Cruelty

The Animal Protection & Rescue League (www.APRL.org) has just convinced Costco.com to stop carrying "foie gras"--liver from cruelly force fed ducks and geese.

"After learning that foie gras is always produced by force feeding ducks or geese to enlarge their livers to over 10 times their normal size, Costco decided it would be irresponsible to continue supporting this cruelty," states Lisa Osborne, APRL campaigns representative. "With a majority of their sales being in California, and state law banning the sale of this product in a few years, they decided to get ahead of the curve."

A lawsuit filed by APRL and In Defense of Animals spurred enactment of Cal. Health & Safety Code section 25980 in 2004, banning the sale or production of foie gras in California, effective 2012. The cities of San Francisco, Berkeley, West Hollywood, Solana Beach and San Diego have recently passed resolutions in support of the ban after being contacted by APRL.

Whole Foods has also had a no foie gras policy since 1997 after representatives observed the force feeding. Sonoma Foie Gras recently settled a lawsuit against Whole Foods for causing their duckling supplier to cut ties with them. On June 16, APRL co-founder and attorney Bryan Pease goes to trial against SFG owner Guillermo Gonzalez for implying to the media that video footage Pease took on his farm in animal cruelty investigations was "staged."

Other establishments to remove foie gras recently after being contacted by APRL include Bay Area based Andronico's Market, San Francisco Mayor Gavin Newsom's Plumpjack Group, all of the Wolfgang Puck restaurants, and several resort hotels in the San Diego area including the Hotel Del.

"We are happy that Costco is making the compassionate decision to no longer sell this product of extreme animal cruelty. The only way to make foie gras is by force feeding the ducks to enlarge their livers to over 10 times their normal size, resulting in difficulty walking and breathing, and causing immense pain and suffering," states APRL campaigns coordinator Christina Tacoronti.

More on APRL's animal cruelty investigations into the "foie gras" industry can be found at www.BanFoieGras.org and www.APRL.org/foiegras.html. Broadcast quality footage of APRL's animal cruelty investigations into the foie gras industry is available on request.