By Annie Gasparro
Soup, Spam and Shake Shack burgers are all getting more
expensive as food companies pass along higher costs to
General Mills Inc., Campbell Soup Co., Unilever PLC, and J.M.
Smucker Co. are among food makers raising prices at supermarkets.
Restaurants including Chipotle Mexican Grill Inc. and Cracker
Barrel Old Country Store Inc. have raised menu prices. Executives
say they expect more price increases this summer as costs remain
elevated for labor, commodities and transport.
"We're in a period of unprecedented commodity inflation,"
Unilever Chief Executive Officer Alan Jope told investors Monday.
He said Unilever would recover some of those costs in part by
selling smaller packages of some foods at the same price as a
Higher prices on grocery-store shelves and restaurant menus are
part of a broader rise in inflation. U.S. consumer prices surged 5%
in May from a year ago to reach the highest annual inflation rate
in nearly 13 years.
More expensive used cars and trucks fueled the increase,
according to Labor Department data, and prices for furniture and
airfare also jumped. Food prices are rising because of the higher
costs for labor and transport but also ingredients including corn,
soybean oil and wheat. Rising meat prices got another bump up last
week when a ransomware attack briefly knocked offline JBS SA plants
that process nearly a quarter of U.S. beef and a fifth of chicken
Suzanne Shinn, a mother of six who lives in Bakersfield, Calif.,
has tried to sidestep prices by shopping more at Dollar Tree Inc.
stores. "We have been bound and determined to lower our monthly
grocery bill, but as a family of eight that isn't always doable,"
Dollar Tree CEO Michael Witynski said on a recent earnings call
that it had been difficult to keep prices lower than those offered
by middle-market competitors.
"Like most retailers, we are faced with higher freight costs,
worker shortages and uncertainty related to inflation," he said.
"These issues are rising as Covid abates."
Prices for cooking oils, wheat, corn and other ingredients are
surging due in part to bad weather abroad and strong export demand.
Labor shortages are hampering operations at stores from Starbucks
Corp. cafes to supermarkets, prompting many employers to raise
wages. Costs to transport food products are up by as much as 25%
from a year ago for some food makers because of high demand for
shipping during the pandemic coupled with a shortage of truck
"There's a lot of stuff that's in the queue," said Neil Stern,
CEO of Good Food Holdings LLC, which owns grocery chains Bristol
Farms and Lazy Acres Natural Market.
Supermarket executives said prices they pay for beef had gone up
from 20% to 40% depending on the cut. Keith Milligan, controller of
Piggly Wiggly grocery stores in Alabama and Georgia, said the
company was passing much of the increase on to customers.
"There's no way we could absorb some of the costs," he said. As
a result, he added, some shoppers are switching from beef to
cheaper chicken cuts.
General Mills CEO Jeff Harmening said this week that he expected
shoppers to accept higher price tags because the increases were
widespread and people were hearing about inflation on the news,
leading them to expect higher grocery bills. On the other hand,
J.M. Smucker Co. said it anticipated its higher prices would dent
sales volume this year as people switched to cheaper options or buy
Walmart Inc. plans to use rising prices across the industry to
create a bigger pricing gap between it and competitors, executives
told analysts recently. Walmart CFO Brett Biggs said it wasn't
known if the inflationary trend would last.
"You are seeing some input costs come down versus where they
were a month or two ago," he said. "You're not seeing interest
rates go up. So there's some signs that maybe there is some of this
Dining chains including Cracker Barrel, Red Robin Gourmet
Burgers Inc. and Fiesta Restaurant Group Inc., said they recently
increased prices by roughly 3% to cover higher labor and commodity
Chipotle said it recently raised prices by roughly 4% in much of
the country after earlier raising prices on delivery orders. Shake
Shack Inc. raised prices on delivery orders by 5% in February,
following a roughly 2% across-the-board price increase in December.
Executives said they might raise prices again to account for higher
labor, and meat prices.
"Everywhere you look right now costs seem to be increasing,"
said Rik Powell, senior vice president for finance.
Campbell is treading lightly, aiming to stay competitive with
prices on soup and snacks while still passing along some increases
this summer. The company said its soup brands gained more market
share than ever in the latest quarter even as sales declined.
"We are going to be very thoughtful about it," CEO Mark Clouse
said. "The last thing we want to do is shut down the growth that
we've worked fairly hard to have."
Hormel Foods Corp. has raised prices for products including
Jennie-O ground turkey, Skippy peanut butter and Spam. The company
said the reopening of restaurant dining rooms was pushing up prices
for bacon and turkey breast, among many other products.
"Quite frankly, we're not done with all the pricing actions that
we need to take," said CEO Jim Snee. "There's still more to
--Jaewon Kang, Heather Haddon and Sarah Nassauer contributed to
Write to Annie Gasparro at email@example.com
(END) Dow Jones Newswires
June 10, 2021 13:11 ET (17:11 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Grafico Azioni Unilever (EU:UNA)
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Grafico Azioni Unilever (EU:UNA)
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