Brands Raise Prices as Supply Chain Falters

Materials shortage, labor and trucking affect companies while consumers increase spending.

October 08, 2021

Supply Chains Cause Issues

CHICAGO—Major brands are passing along the increased supply chain expenses to customers by raising costs at a time with consumers are spending more, reports the Wall Street Journal. Grocery store spending was up 4% in August year over year, according to U.S. Census Bureau data.

PepsiCo is looking at higher costs for aluminum cans, plastic bottles, labor and trucking, and there was a shortage of Gatorade in Pennsylvania, New York, Massachusetts and among other places as PepsiCo tackled a plastic bottle shortage.

However, the demand for PepsiCo products is increasing. The company expects organic revenue, which adjusts for items such as foreign-exchange translation, acquisitions and divestitures, to grow about 8% for fiscal 2021, reports the Wall Street Journal. It previously expected organic revenue to grow 6%.

Conagra raised its inflation projection, as quarterly profit fell 29%. The company said its attempting to respond to higher-than-expected demand of consumer spending with many still working remotely and eating at home.

To make the most out of the supply chain issues, Best Buy introduced a $200-a-year subscription model, reports Vox. The program gives consumers lower prices, exclusive access to hard-to-find devices, 24/7 tech support and free shipping. The steep price could be offset by the guarantee of products during the holiday shopping season, which is projected to be heavily impacted by supply chain disruptions.

Purchase limits are happening again in anticipation of low inventory levels because of supply chain backups, including a shortage of shipping containers, port delays and trucking and driver shortages. Costco placed limits on toilet paper, packs of bottled water and cleaning supplies in anticipation of potential COVID-19 surges and difficulties receiving the products.

The supply chain issues stem from COVID-19 outbreaks in key Asian supplier countries, the U.S. truck driver shortage, domestic warehouse worker shortages and wildfires in Bangladesh. Factories are also trying to recover from last year’s holiday shopping season.

As NACS Magazine shares in the October 2021 issue, the shortage of truck drivers in the U.S. has carriers trying to tap into underleveraged talent pools.