Supply chain issues continue to hold up deliveries and boost prices across the globe. With plastics, books, and clothes already becoming scarce, snacks may be the next market to see significant price increases.
The news comes via an investor call with Mondelēz International (NASDAQ: MDLZ), the makers of a wide swath of the snack market, including Oreos, Chips Ahoy!, Cadbury, Halls, Honey Maid, Triscuit, Wheat Thins, Toblerone, and Ritz. Executives told investors that customers should expect to see price increases on the company's products of between 6 and 7%.
Chief Financial Officer Luca Zaramella said that the primary forces behind the price increase are increased transportation costs and "industrywide supply chain constraints". The company told NPR that it has seen production cost inflation across several markets, including North America.
"I expect this to continue for the entire 2022," Zaramella said. "I think the holiday season ahead of us will put even more strains on global supply chains. Quite honestly I believe 2022 is going to be a tough situation for global supply chains."
The company said that the increased costs are being caused by the rising cost of "commodities, transportation and packaging", as well as increased labor costs.
"In the end we believe that supporting a brand, making sure the quality is there, and having the right prices is absolutely the right strategy for us," Zaramella told reporters.
Despite increased costs, Mondelēz says that sales haven't decreased. In fact, the company says that the pandemic may actually have boosted sales.
"Ongoing uncertainty is fueling the desire for comfort and indulgence which has been a consistent trend throughout COVID," chairman and chief executive officer Dirk Van de Put said on the investor call.
Mondelēz isn't the only manufacturing giant that's announced plans to raise prices. Unilever (NYSE: UL), the owner of snack brands including Lipton, Ben & Jerry's, Magnum, Klondike, and healthcare brands including Axe, Dove, Noxzema, St. Ives, Simple, Suave, Vaseline, as well as dozens of other smaller brands, announced last month that it would be raising prices by 4%.
At McDonald's (NYSE: MCD), sales and revenue are booming, but increased ingredient and labor costs mean the company raised prices, regardless. In 2021, McDonald's prices are expected to be 6% higher than in 2020, with increases up to this point being "pretty well received by customers", according to CEO Chris Kempczinski.