Food and Beverages Could See Higher Prices

The pandemic recovery is putting pressure on costs for packaging, transportation and ingredients.

July 30, 2021

Prices Rising on Graph

ST. LOUIS—The manufacturers of some of the most popular drink and food brands say prices will continue to rise as they struggle to combat the significantly higher costs for transportation, packaging and ingredients, the Wall Street Journal. Anheuser-Busch InBev SA, Danone SA, Diageo PLC and Nestlé SA all indicated this week that sales have been recovering but that also means a tighter supply for shipping, ingredients and packaging.

For example, prices have increased for Nestlé ice creams, Diageo’s Baileys and Casamigos tequila brands and AB InBev could raise certain beer prices, notes the Journal.  “We do expect price increases to accelerate from what you saw in the first half,” said Nestlé CEO Mark Schneider. “After several years of low inflation, all of a sudden it accelerated very strongly starting in March and is continuing to accelerate.”

This year, Nestlé has already increased prices an average of 1.3% across the world from January to June, with prices of milk-based products, including ice cream, jumping an average of 3.5%, while water brands were boosted 1.6%. In the US, Schneider pointed to commodities, packaging and transportation costs increasing, while labor costs have also risen.

AB InBev and Diageo both said bars reopening have boosted business, but skyrocketing demand for cans in the US  and higher ingredients and delivery costs have squeezed those profits. “What we’re seeing is about a couple of points higher inflation coming through now,” said Diageo CFO Lavanya Chandrashekar.

NACS Daily previously reported that, coffee is another category that could hit a six-year high in pricing, due to a bad frost and other natural disasters occurring in Brazil, a shortage of containers and antigovernment protests obstructing exports.