US Food Companies Announce Domino Price Increases

(Source: Reuters)

[Asia Economy Reporter Yujin Cho] Due to the sharp rise in crude oil and grain prices, U.S. food companies have announced a series of price increases.

On the 16th (local time), major foreign media reported that as grocery consumption increased in households due to COVID-19, the prices of raw materials such as wheat, sugar, and soybeans surged, raising the likelihood that major U.S. food companies will raise product prices this year.

Sean Connolly, CEO of ConAgra Brands, a major U.S. food company, recently said in an internal executive video conference, "To sustain sales growth through innovation, the company needs to implement price increases based on inflation this year."

He stated that the surge in raw material prices combined with supply shortages amid increased household grocery demand due to COVID-19 is fueling food inflation.

The cost ratio of raw materials for ConAgra Brands, which focuses on frozen and convenience foods, is about 60-65%.

Miguel Patricio, CEO of Kraft Heinz, also said, "If asked about the possibility of price increases this year, I can say it is possible for some product categories exposed to certain items." He expected the price increases to mainly target products made from wheat, sugar, and oils.

Kraft Heinz, which mainly produces macaroni and cheese, mayonnaise, and salad dressings, has recently reduced product promotions and discount events due to the burden of rising raw material costs.

He said, "We have inflation, we see inflation, and we are concerned about inflation."

Other major food companies such as Lipton and Unilever also hinted at possible price increases during recent earnings calls. Graham Pitkethly, CFO, said, "There is pressure from rising raw material costs," and predicted "product price increases due to single-digit inflation in the first half of this year."

Foreign media analyzed that inflation, which had been suppressed by COVID-19, is being stimulated by consumers' grocery hoarding and rising raw material prices.

The rise in food prices in the international market is also significant. According to the United Nations Food and Agriculture Organization (FAO), the global food price index in December last year recorded the highest level in the past six years. In particular, meat and dairy products rose by 1.7% and 3.2%, respectively, marking the largest increases.

This content was produced with the assistance of AI translation services.