Soon after the “Great Recession” of 2007–2008, food manufacturers and supermarkets got in to what many industry observers describe as a pricing war. The supermarkets were upset because food manufacturers had been increasing price-sensitive consumers hurt by the recession. But the food manufacturers claimed they were in a profit bind as well because they were locked in to contracts for commodities that were negotiated prior to the recession when prices were significantly higher. The conflict emerging from this pricing problem has caused some major supermarket chains to threaten to decrease shelf space allocated to national brands and to fill that space with more private brand products. What do you think is the underlying cause of this conflict between the food manufacturers and supermarkets? How might it be resolved?
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