Many food companies are raising prices to offset higher costs.
Higher commodity costs are pressuring companies’ profits, while some are also starting to lap their surging sales sparked by stockpiling in 2020, reported CNBC (March 31). Analysts are also predicting lower sales as more consumers get vaccinated and return to pre-pandemic habits.
The food price index recently climbed 0.2%, with incremental gains across most categories, while the consumer foods index rose 0.5%.
Here’s a look at some noteworthy, well-established companies that are increasing prices:
Among the first to raise prices as commodity costs went up and affected profit was J.M. Smucker. The company raised the price of its Jif peanut butter in August as peanut yields fell, and its competitors soon followed.
“In this case, and particularly in peanut butter, it was very clear that we were experiencing cost pressure and could demonstrate that to our trading partners and so forth,” CEO Mark Smucker told analysts back in November.
Coca-Cola will raise prices on its drinks to combat the impact of higher commodity costs, its CEO told CNBC (April 19).
“We are well-hedged in ’21, but there’s pressure built up for ’22, and so there will have to be some price increases,” CEO James Quincey said in an interview with CNBC. “We intend to manage those intelligently, thinking through the way we use package sizes and really optimize the price points for consumers.”
The last time the company announced a price increase was in 2018, citing the impact of aluminum tariffs under the Trump administration. Quincey did not reveal which specific Coke products will have higher price tags this time around, however.
General Mills CFO Kofi Bruce said on the company’s March 24 earnings call that it is taking action now and in the coming months to raise prices.
The company fell short of Wall Street’s estimates for its fiscal third-quarter earnings, as it was hurt by higher commodity costs. The impending price hikes would benefit its results for fiscal 2022, which starts in late spring.