Food and household brands warn of more price hikes as Iran war costs bite
XLP•Consumer goods and food companies expect to raise prices next year as higher energy, raw material and freight costs linked to the Iran war pressure margins. Procter & Gamble raised its expected profit hit from those costs to $1.4 billion from $1 billion.
1. Costs pressure companies
Companies including Coca-Cola, Procter & Gamble, Nestle and Reckitt warned of further price hikes next year as higher energy, raw material and freight costs pressure margins. Shoppers remain reluctant to spend more on groceries and other name-brand packaged goods.
2. Pricing trade-offs
Reckitt CEO Kris Licht said companies will probably have to raise prices at current commodity and input cost levels, while weighing price increases against promotional spending. Procter & Gamble CFO Andre Schulten said the industry is generally raising prices because it cannot recover this level of commodity pressure without doing so.
3. Consumers may pull back
Lindt & Sprüngli’s chair said the company misjudged how consumers would respond to price increases. Nestle CFO Anna Manz said volumes can dip in the short term after price increases, and that the company will raise prices only to the extent it can without damaging medium-term consumer penetration.
