These Beloved Snacks Will Keep Getting More Expensive, Company Hints
Oreos are about to get pricier. Mondelez International, the food and beverage company responsible for beloved snacks like Ritz Crackers, Sour Patch Kids, Chips Ahoy, and yes, Oreos, said recently that it expects to increase prices yet again as it continues to face labor shortages and commodity inflation.
The snack giant's latest price hike of 7% took effect this month in the U.S., a change Mondelez had announced back in November. But the company said consumers should expect another increase this year, according to The Wall Street Journal, as Mondelez's expenses have continued to climb since then.
Food companies of all stripes have been hit hard by growing shipping and labor costs. Concurrently, the high demand for commodities like wheat and sugar has caused the price of raw materials to surge, ultimately driving product shortages in grocery stores across the country.
"[Suppliers] don't have enough for all their customers, so they basically say you'll have to pay what I tell you to pay," Dirk Van de Put, Mondelez's CEO, told The Wall Street Journal. "It's all out of whack."
While Mondelez has not disclosed exactly how much it expects prices to rise this year, Van de Put said the company will have to monitor the ongoing supply chain issues, particularly in North America where the disruptions have been the most prominent.
The news of Mondelez raising prices comes less than six months after nearly 1,000 union workers went on strike at the company's U.S. factories due to disagreements over labor contracts. These labor challenges, along with the soaring demand for products, drained the company's inventories.
"The effect of [the strike] may modestly linger, but should dissipate as the year progresses," John Boylan, an analyst at Edward Jones, told Reuters.
Van de Put said these issues also affect how much advertising the company can do, with Mondelez not being able to allocate as much money to the promotion of its snacks. However, while the pandemic continues to disrupt the supply chain, it has also "fueled consumers' desire for comfort and indulgence"—two trends that have benefited Mondelez's snack sales, Van de Put said.
For more grocery-related news, don't forget to check out A Shortage of Avocados Is Causing Prices to Skyrocket.