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- Food prices are on the rise again, as major companies struggle to combat surging transportation costs.
- Nestle and Unilever have hiked prices across several popular brands to maintain profit margins.
- The rise in commodity costs is showing no signs of easing in the coming months.
- See more stories on Insider’s business page.
Top food and beverage companies are set to hike prices even higher after already initiating an increase in product costs earlier this year.
US inflation is rising at its fastest pace in over a decade as skyrocketing transportation costs meet a surge in consumer demand.
Nestle CEO Mark Schneider said on Thursday that the company plans to raise prices going into the second half of 2021 by about 2% overall. Earlier this year, the company had hiked its prices globally by an average of about 1.3%, but it has not been enough to compensate for runaway shipping costs and the wage hikes that have been implemented to offset a national labor shortage, the CEO said.
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In particular, the company said the cost of dairy-based products like ice cream have continued to rise, alongside the costs of producing bottled water.
Coffee prices are also at a six-year high due to a cold snap in Brazil — one of the commodity’s top producers. Both ingredients are putting increased pressure on the company responsible for brands like Edy’s, Häagen-Dazs, and Nescafe.
Other major companies, including Unilever, Procter & Gamble, and General Mills have warned investors over the past few weeks that rising commodity costs could force their prices higher, especially as demand for products has boomed alongside an increase in US vaccination rates and the return to more normal work and travel patterns. The three major companies had already raised prices by up to 3% across several brands in May.
Last week, Unilever announced it was raising prices for multiple brands, including Ben & Jerry’s, in response to soybean oil prices that are 80% higher than this time last year.
Popular alcohol company Diageo also said on Thursday it is raising its prices on several of its products, including Bailey’s and Casamigos tequila. The company has seen a boost in alcohol sales since the US vaccination rate has increased, but the spike in demand has not been able to compensate for the even greater rise in the cost of imported goods like alcohol.
Similarly, beer prices may also be on the rise. Anheuser-Busch, the company known for its Budweiser brand said on Thursday it is looking into the possibility of selling its products at an elevated price.
Danone, the company known for its Activia yogurt and Evian water, told investors on the same day that it plans to raise prices across all of its products to maintain profit margins.
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While many of the companies are looking to raise prices for the second time this year, experts say prices increases will likely not stope there and will continue to rise even further in the coming months as shipping delays show no signs of easing, and poor weather conditions across the globe threaten food supplies.
From the cold snap in Brazil to floods in China and Europe, as well as scorching temperatures in North America, experts told Bloomberg climate change and the weather volatility that comes with it could cripple the food industry.
Insider reached out to all of the companies mentioned in the article about the prices increases but did not receive a comment in time for publication.