Are Oreo Cookies and Ritz Crackers About to Get More Expensive?
Food giant Mondelez International said it’s looking to boost margins on popular products.
Yesterday, Mondelez International — the Deerfield, Illinois-based food giant behind a large swath of U.S. brands like Chips Ahoy, Oreo, Ritz, Triscuits, and Trident — announced plans to increase prices in 2019 during the company’s quarterly earnings call. And though investors seemed appeased by the plan to increase margins, consumers will almost certainly be paying more for many of these products next year.
Pricing on products in the U.S. came up repeatedly in the call with analysists, with Mondelez CFO Luca Zaramella specifically stating that prices would be increasing on “biscuits, gum, and candy” at the start of next year. CEO Dirk Van de Put later said that these increases would come in a variety for forms, including simple price hikes, but also reduced package sizes and promotions. “We believe that it's the right move for us, seeing the overall environment and the way our categories are behaving at the moment,” he said in response to a question from Robert Moskow of Credit Suisse. “There are cost pressures also related to this as it relates to freight and some commodities, the trade is well aware of that.”
Despite his vague language, Van de Put was suggesting that increased prices aren’t simply a Mondelez phenomenon. As the Wall Street Journal explains, record-high shipping prices and rising costs of some ingredients have forced a number of major companies including General Mills, Unilever and Kraft Heinz to also raise prices recently, and grocers are accepting this new reality. “There has been more openness to price increases,” Van de Put told the WSJ.
Though shoppers certainly can’t be excited at the prospect of paying more, analysts appeared to walk away happy. “That (Mondelez) was able to take this pricing is a positive industry development, in our view,” J.P. Morgan’s Ken Goldman wrote according to the Chicago Tribune. To put it another way, maybe it’s time to put your money in the stock market instead of into snacks.