The latest supply chain crisis intensified, and several food giants announced price increases!

Recently, executives of global food giant Kraft Heinz said that they are raising commodity prices in necessary regions around the world and reminding consumers to get used to higher food prices. Driven by the rising prices of food raw materials, blocked supply chains, high labor costs, soaring energy prices and other factors, global food enterprises have to raise product prices to resist inflationary pressure.

Before Kraft Heinz, several well-known multinational food enterprises had announced price increases. Nestle, Unilever, Coca Cola and Pepsi have announced plans to increase commodity prices. Nestle said it expects the input cost to rise by about 4% this year, so the company needs to raise the price as soon as possible. Unilever said that the company is facing the biggest pressure of cost rise in 10 years and will raise prices in multiple markets and categories.

From these price increase announcements, it is not difficult to see that the rise in the cost of raw materials is the direct reason for the rise in product prices. According to the monthly food price index released by the food and Agriculture Organization of the United Nations, global food prices rose to a 10-year high. In September, global food prices rose 32.8% year-on-year. The food price of "high fever" has increased the cost pressure of food production enterprises.

However, just the fluctuation of grain prices is not enough for these enterprises to touch the sensitive nerve of consumers. PepsiCo said that in addition to the shortage of raw materials, factors such as labor shortage, reduced availability of air or other commercial transportation, port closure or border restrictions also have an adverse impact on the supply chain, which may further affect PepsiCo's ability to produce and sell products.

At present, the cost pressure faced by food enterprises is not only from the rise of food prices, but also from the supply chain crisis. Port delays, one box is hard to find, transportation delays and insufficient supply caused by the global supply chain crisis, as well as the resulting short supply and price rise of packaging, logistics and energy, which are superimposed with the rise of commodity prices and food supply shortage, pushing up the production and operation costs of food production enterprises at all levels and eroding their profit margins, It had to offset the rise in costs by raising prices.

In addition, with rising prices and expectations of sustained inflation for some time to come, the labor shortage may further aggravate. In European and American countries, labor shortage worsens the supply chain crisis. With the rise of prices and people's expectation of salary, the problem of recruitment difficulty and labor shortage becomes more serious, increasing the operation cost of enterprises.

Affected by the epidemic, it will take time for the global supply chain to recover, and the international logistics dilemma and energy supply problems will be difficult to alleviate in a short time. In its latest world economic outlook report, the International Monetary Fund warned that the upward risk of global inflation is increasing and there is great uncertainty in the inflation outlook. Overall inflation in the United States and some emerging markets and developing economies rose rapidly. Under inflationary pressure, more food enterprises will be unable to support and announce price increases. If food producers want to stabilize product prices, they have to make an issue of restoring the supply chain and controlling inflation.

Source: Economic Daily - China Economic Net

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