In recent years, life has become quite expensive, especially when it comes to the price of food and other everyday items. Two of the world’s biggest food and personal care companies, Unilever and Danone, are seeing success as they slow down the price hikes that hit shoppers hard during the pandemic and after the war in Ukraine. Both companies had to raise prices to keep up with the rising costs of raw materials, transportation, and energy. However, this led to many shoppers switching to cheaper, private-label products from stores like Walmart, Tesco, and Carrefour.

But now, things are starting to change for the better. Unilever and Danone have reported stronger-than-expected sales in the third quarter of 2024, thanks to slowing down price increases and making smart moves to win back customers. So, how did they manage to bring their shoppers back, and what does this mean for the future?

Rising Prices, Rising Problems

It all started with the pandemic. During the COVID-19 outbreak, prices for nearly everything went up. The cost of shipping goods around the world skyrocketed, and the materials needed to make products became more expensive. Then, in 2022, Russia invaded Ukraine, and things got even worse. The prices of grain and energy shot up, making it even harder for companies to keep their prices affordable for everyday people.

Unilever, the company behind brands like Dove soap and Magnum ice cream, had to raise its prices sharply. At the end of 2022, prices for Unilever products rose by as much as 13.3%. In some categories, like home care, prices were even higher, reaching nearly 17% more than before. Ice cream fans also felt the pinch, with their favorite treats costing around 14% more.

Similarly, Danone, known for its dairy and water products, had to increase prices to keep up with rising costs. As a result, many people started buying cheaper products, often choosing store-brand items instead of the big names they were used to.

Shoppers Turn to Cheaper Brands

With prices climbing so fast, it’s no surprise that many shoppers looked for ways to save money. They started buying cheaper products, especially private-label items from large retailers like Walmart, Tesco, and Carrefour. These store-brand products offered a good alternative to more expensive name brands and helped people stick to their budgets during tough times.

For a while, this shift in shopping habits caused problems for companies like Unilever and Danone. But these two giants didn’t just sit back and watch their customers disappear. They knew they needed to make some changes to win people back, and that’s exactly what they did.

A New Approach: Slowing Down Price Hikes

Unilever and Danone realized that continuing to raise prices wasn’t the answer. Instead, they decided to slow down the price hikes and focus on offering better value to their customers. In the third quarter of 2024, Unilever only raised prices by 0.9%. This is a big change from the price increases they made at the end of 2022. Along with slowing down price increases, Unilever also saw a jump in the number of products they sold. Their sales volumes went up by 3.5%, which is the largest increase since early 2021. This was a pleasant surprise, as analysts had only expected a 3.2% rise in volumes.

Danone also slowed down their price hikes, raising prices by just 0.7% in the third quarter of 2024. Like Unilever, they saw an increase in sales volumes, which rose by 3.6%. This was largely driven by strong demand in North America for products like high-protein snacks, coffee creamers, and bottled water.

Winning Shoppers Back

So, how did Unilever and Danone manage to get their customers back? The answer lies in smart innovations and a focus on what consumers want. Unilever introduced new and exciting products, like variations of Dove soap and Comfort fabric conditioner, as well as different flavors of Magnum ice cream. These popular items helped bring shoppers back to Unilever’s brands.

Unilever’s CEO, Hein Schumacher, explained that this was the fourth quarter in a row where they saw an increase in the number of products sold. Each of Unilever’s business groups, from home care to food, experienced growth. Schumacher was particularly proud of how well Dove, Comfort, and Magnum performed, showing that people were excited to buy their favorite products again.

Danone also introduced new products that appealed to shoppers, especially in North America. Their high-protein products, coffee creamers, and bottled water were in high demand, helping to boost their sales volumes. By offering items that meet the changing needs of consumers, Danone was able to attract customers who had previously turned to cheaper alternatives.

What’s Next?

Unilever and Danone are optimistic about the future. Both companies have maintained their sales outlooks for 2024, meaning they believe they can continue to grow despite the challenges they faced in recent years. By slowing down price hikes and focusing on what consumers want, they have set themselves up for success.

While the pandemic and the war in Ukraine caused prices to rise dramatically, it seems that things are starting to improve. For shoppers, this is good news. The slow-down in price increases means that everyday items might become more affordable, and with companies like Unilever and Danone investing in new products, there are plenty of reasons to be excited about what’s on the shelves.

In the end, it’s all about finding the right balance. Unilever and Danone are showing that by listening to their customers and adapting to changing times, they can stay competitive and win back the loyalty of shoppers who had turned to cheaper alternatives. With their price hikes slowing down and their sales volumes rising, these two giants are proving that sometimes, taking things slow and steady really does win the race.