“‘Inflation was killing 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 circulating from Factor75, a food-delivery company that specializes in bringing fully prepared, diet-friendly meals to customers’ homes.
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Factor75 is using inflation anxiety in its latest advertising campaign in an effort to steer consumers away from grocery stores, and toward its subscription service. The company insinuates that grocery-store prices are being hit hard by inflation in the U.S., which is borne out by the latest inflation data. But it’s not entirely clear that premade services are free from the supply-chain issues, nor elevated pandemic-era eat-at-home demand and other factors sending food bills higher.
Consumer prices rose 0.5% in December, pushing the annualized retail inflation rate to a near-40-year high of 7%. One particular area of price increases over the past year is in fact at the grocery store. Americans are paying 15.2% more for beef, 20.7% more for eggs and 5.9% more for milk.
The most popular subscription option from Factor75 includes eight meals per week for $12.38 per meal, per person, more than most consumers would spend per meal made with store-bought groceries.
“There is a long history of companies using ‘inflation’ in their advertising,” Doron Gerstel, CEO of Perion, a global advertising company that executes ads on multiple platforms, including digital and TV, told MarketWatch in an email. “It just has not happened recently, because we have been in such a low-inflation environment.”
“However, back in the ’70s and ’80s, we would see advertising that promised ‘inflation-busting prices’ all the time. It is 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.
Representatives from Factor75 did not respond to MarketWatch’s request for comment for this story.
Factor75 is similar to food-delivery companies HelloFresh and Blue Apron APRN, +10.08% but delivers fully prepared meals instead of make-it-yourself meal kits. At times during the COVID-19 pandemic, meal-delivery companies saw an increase in demand as more people than ever limited trips outside their homes.
In 2020 the U.S. subsidiary of German-owned Hello Fresh purchased Factor75 Inc. in a deal worth up to $277 million.
From the archives (August 2018): People like meal kits, but their business model is unsustainable
Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School of Business, said this week that inflation in the U.S. is mainly being caused by “too much money chasing too few goods.”