Are you aware that snacks that are often loved by many have experienced price increases, even though food inflation is said to be slowing down?
The fact is, in the first half of this year the largest food companies in the world have actively increased the prices of their products.
This follows several earnings reports released last week, especially Nestle which reported that it has raised its prices by up to 9% in the first six months of 2023.
Not only that, Coca-Cola was also found to have increased its prices by up to 10% in the second quarter, while its competitor PepsiCo raised its prices 15% higher.
Despite the increase, PepsiCo's CEO said that consumers are still buying the company's products, including increasingly expensive Quaker Oats.
Why do companies need to raise product prices?
Several external factors have impacted the cost that food companies pay to produce their products.
For example, the ongoing war in Ukraine has caused some grain prices to continue to rise above normal.
However, compared to when Covid hit, companies faced little to no cost changes and as their earnings last week showed, most of the price increases led to profits.
Coca-cola recorded an 11% increase in earnings per share for the second quarter, while Nestle also posted an 11% gain and PepsiCo nearly doubled in its latest quarter.
Even so, the move to increase the price is not always beneficial to the company because in the end, the consumer will become an alternative or substitute for the cheaper product.
