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  • March 2022 (Revised August 2022)
  • Case
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Hometown Foods: Changing Price Amid Inflation

By: Julian De Freitas, Jeremy Yang and Das Narayandas
  • Format:Print
  • | Language:English
  • | Pages:23
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Abstract

During the early part of the 2021 Covid-19 pandemic, Hometown Foods, a large seller of flour-based products, thrived as consumers hoarded baked goods and took up baking to pass the time and find comfort. Then, amid growing shortages in commodities, a vaccine arrived, businesses began to re-open, and consumers benefited from federal relief aid. This perfect storm of high demand amid stock shortages generated the highest inflation in 13 years.
Commodities accounting for a large percentage of its products, Hometown had to decide whether to increase prices, and if so by how much. Although the industry norm was to wait for the number #1 player in each product category to increase price first, with escalating ingredient costs significantly reducing Hometown’s margin and profit, lack of action could result in serious financial distress. A decision to move first would entail several more decisions. Should Hometown price for cost or elasticity, employ component or blended pricing? Given pandemic-induced volatility, how should it prioritize quantitative pricing calculations relative to qualitative considerations? It would also need to anticipate reactions from competitors and stakeholders including its sales force, retailers, and consumers as well as investors and lenders.

Keywords

COVID-19 Pandemic; Consumer Behavior; Supply Chain; Inflation and Deflation; Spending; Price Bubble; Price; Volatility; Food and Beverage Industry

Citation

De Freitas, Julian, Jeremy Yang, and Das Narayandas. "Hometown Foods: Changing Price Amid Inflation." Harvard Business School Case 522-087, March 2022. (Revised August 2022.)
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About The Authors

Julian De Freitas

Marketing
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Jeremy Yang

Marketing
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Das Narayandas

Marketing
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Related Work

    • March 2022
    • Faculty Research

    Hometown Foods Spreadsheet Supplement for Students

    By: Julian De Freitas, Jeremy Yang and Das Narayandas
    • March 2022
    • Faculty Research

    Hometown Foods Spreadsheet Supplement for Instructors

    By: Julian De Freitas, Jeremy Yang and Das Narayandas
    • July 2022
    • Faculty Research

    Hometown Foods

    By: Julian De Freitas, Jeremy Yang and Das Narayandas
    • June 2022
    • Faculty Research

    Hometown Foods

    By: Julian De Freitas and Jeremy Yang
    • March 2022 (Revised August 2022)
    • Faculty Research

    Hometown Foods: Changing Price Amid Inflation

    By: Julian De Freitas, Jeremy Yang and Das Narayandas
Related Work
  • Hometown Foods Spreadsheet Supplement for Students By: Julian De Freitas, Jeremy Yang and Das Narayandas
  • Hometown Foods Spreadsheet Supplement for Instructors By: Julian De Freitas, Jeremy Yang and Das Narayandas
  • Hometown Foods By: Julian De Freitas, Jeremy Yang and Das Narayandas
  • Hometown Foods By: Julian De Freitas and Jeremy Yang
  • Hometown Foods: Changing Price Amid Inflation By: Julian De Freitas, Jeremy Yang and Das Narayandas
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