Elasticity Matters: A Pricing Story from the Frontline

In today’s hyper-competitive world of Food CPG, we operate across 20+ categories, multiple countries, and a highly fragmented retail environment. During the turbulent years of 2021–2022, we experienced massive growth—but also major challenges. That pressure became a catalyst for transformation.

We realized we needed to strengthen our analytical muscle, build better pricing tools, and rethink our internal processes. And at the heart of it all stood one often-overlooked concept: price elasticity.

When Price Goes Up, Volume Drops — No Surprise. Or Is It?

At one point, we ran a regression-based elasticity analysis that showed a 10% price increase could lead to a 22% volume decline. A bold assumption—but we trusted the model.

And guess what?
It happened. Exactly as predicted.

We saw a sharp drop in volume and market share. But thanks to this data-driven pricing action, we protected our contribution margin—and that made all the difference.

When Price Cuts Win Consumers Back

In the aftermath, lower-priced competitors and private labels gained share. We were losing consumers. But instead of panicking, we redesigned our pricing playbook.

• We rebuilt the elasticity model to guide us toward a critical price point.
• Sales teams got clear tools and selling stories focused on value and mutual profit.
• We executed a targeted price decrease across markets.

The result?
Market share recovery. Volume came back. And we saw a strong correlation (67%) between price sensitivity and performance.

4 Takeaways from the Field:

✅ Elasticity always matters.
Ignore it, and you risk margin or market share—often both.

✅ Base price and promo price = two different games.
Each needs its own elasticity and assumptions.

✅ Elasticity models are critical.
Even a basic linear model can create clarity and courage.

✅ Bring your customers into the equation.
Value-based selling works—especially when you show how your move supports their profit