McDonalds, Coca Cola and Huggies among brands to warn of price hikes as US struggles with inflation

Enjoying a Big Mac and a glass of Coke will no longer be a cheap treat in the midst of soaring inflation.

Major companies including McDonalds, Coca-Cola, Huggies maker Kimberly-Clark, and even humble New York City bodega owners have been forced to make their products more expensive to cope with higher costs, adding more pressure. on normal families.

The warnings about the impact of rising inflation on commodity prices come after Walmart lowered its profit outlook for the year, saying rising food and gas prices are forcing shoppers to cut back. discretionary items, especially clothing, which lead to higher profit margins.

Russia’s war in Ukraine has exacerbated rising prices for almost everything from wheat and cooking oil, to natural gas and crude oil, making it more expensive to produce goods.

These costs are passed on to customers, either through smaller sizes or higher prices.

Unilever, the consumer goods giant that owns brands ranging from Ben & Jerry's ice cream to Dove skin care products, hiked prices by more than 11% between April and June in response to high inflation

Unilever, the consumer goods giant that owns brands ranging from Ben & Jerry’s ice cream to Dove skin care products, hiked prices by more than 11% between April and June in response to high inflation

Russia's war in Ukraine has exacerbated rising prices for almost everything from wheat and cooking oil, to natural gas and crude oil, making it more expensive to produce goods.  In the photo: graph showing the rise in inflation

Russia’s war in Ukraine has exacerbated rising prices for almost everything from wheat and cooking oil, to natural gas and crude oil, making it more expensive to produce goods. In the photo: graph showing the rise in inflation

Huggies maker Kimberly-Clark was forced to make their products more expensive to cope with higher costs

Huggies maker Kimberly-Clark was forced to make their products more expensive to cope with higher costs

Unilever, the consumer goods giant that owns brands ranging from Ben & Jerry’s ice cream to Dove skin care products, hiked prices by more than 11% between April and June in response to high inflation.

This bolstered revenue in the first half of the year, with the London-based company posting 8.1% sales growth on Tuesday, driven by higher prices to offset the cost of making its products.

“The challenges of inflation persist and the global macroeconomic outlook is uncertain, but we remain intensely focused on operational excellence and results in 2022 and beyond,” said Alan Jope, CEO of Unilever.

Meanwhile, Amazon said Tuesday that it will increase its fees for Prime in Europe in an effort to bolster its profits amid slowing demand and rising inflation. In the UK, fees will increase by 20 percent from £ 79 to £ 95.

Coca-Cola has also raised prices globally to offset the higher costs of ingredients and transportation. Coca-Cola president and CEO James Quincey said those higher prices aren’t impacting demand yet.

Meanwhile, Amazon said Tuesday that it will increase its fees for Prime in Europe in an effort to bolster its profits amid slowing demand and rising inflation.  In the UK, fees will increase by 20 percent from £ 79 to £ 95

Meanwhile, Amazon said Tuesday that it will increase its fees for Prime in Europe in an effort to bolster its profits amid slowing demand and rising inflation. In the UK, fees will increase by 20 percent from £ 79 to £ 95

But Quincey said it’s hard to get a clear consumer reading right now. There are early signs that low-income shoppers are trading for cheaper food brands in groceries and convenience stores, for example, but the demand for travel and leisure, for example in baseball stadiums and theme parks, is extremely strong.

“This post-COVID re-prioritization of consumer spending overlaps with what appears to be a squeeze on purchasing power,” Quincey said Tuesday in a conference call with investors.

“How everything will turn out in the second half and next year, there are many opinions and I don’t think anyone will know until we really get there.”

Rising Coca-Cola prices and rising demand meant the company posted strong sales in the second quarter.

The company also raised its revenue expectations on Tuesday, saying it now expects organic revenue growth of between 12% and 13% for the full year. This is up from previous projections of an increase from 7% to 8%.

Revenue grew 12% in the April-June period to $ 11.3 billion, the Atlanta-based company said. According to analysts interviewed by FactSet, this was well ahead of Wall Street’s forecast of $ 10.56 billion.

Rising Coca-Cola prices and rising demand meant the company posted strong sales in the second quarter

Rising Coca-Cola prices and rising demand meant the company posted strong sales in the second quarter

But for McDonald’s, the rise in prices had an impact on US demand. This means that the company’s revenue was below expectations in the second quarter.

The Chicago burger giant said its revenue fell 3% to $ 5.72 billion in the April-June period. This was lower than Wall Street’s forecast of $ 5.8 billion, according to analysts interviewed by FactSet.

Sales in the same store, or sales in stores that have been open for at least a year, have increased by nearly 10% worldwide. It was higher than the 6.8% that analysts had expected.

But there were double-digit drops for similar stores in China, where restaurants were temporarily closed across the country for most of the quarter.

Sales at the same store in the US increased 3.7%. McDonald’s said most of that increase was due to rising prices, with in-store traffic remaining flat.

CFO Kevin Ozan said McDonald’s is seeing some trade towards cheaper items and lower sales of combined meals in the United States, particularly among low-income consumers.

But for McDonald's, the rise in prices had an impact on US demand.  This means that the company's revenue was below expectations in the second quarter

But for McDonald’s, the rise in prices had an impact on US demand. This means that the company’s revenue was below expectations in the second quarter

The number of customers per sale has also declined since the height of the pandemic, when stranded families often picked up large orders at the drive-thru.

Ozan said price increases in the US between 8% and 9% year-on-year are likely to continue for the rest of the year as McDonald’s will offset its higher costs. McDonald’s expects its food and paper costs to increase by 12% to 14% for the full year, while its labor costs will increase by 10%.

CEO Chris Kempczinski said McDonald’s benefited from another form of decline, with higher-income Americans choosing to visit a McDonald’s rather than more expensive restaurants on a few days.

“Even though we are pushing through prices, the consumer is tolerating it well,” Kempczinski said.

Meanwhile, in New York, the classic bodega breakfast sandwich – with bacon and eggs and cheese – was also hit.

To keep up with today’s inflation levels due to the pandemic and Russia’s war with Ukraine, bodega owners only need to raise the prices of their popular low-priced breakfast sandwiches.

“Bacon, eggs and cheese, you can’t take that sandwich away,” said Francisco Marte, owner of a Bronx winery. “This is New Yorkers’ favorite sandwich.”

Mars had to raise the prices of everything from sugar to chips, and the cost of its bacon, egg and cheese sandwich went from $ 2.50 to $ 4.50.

At the wholesale level, inflation rose 11.3% in June from a year earlier, the US Department of Labor reported. Producer prices increased nearly 18% for goods and nearly 8% for services compared to June 2021.

‘These things happen. And normally, in normal times, the supply chain is able to absorb some of this shock, ”said Katie Denis, spokesperson for the Consumer Brands Association, a trade group representing food, personal care and cleaning companies. ‘ Right now, there is no game at all. ‘

Frances Rice, who stopped at the Mars bodega for bacon, eggs, and cheese, says she’s trying to figure out how to cope with lower budgets as prices rise. She says there is always a silver lining.

“It means I buy a good breakfast and stretch it until lunch and don’t eat until I get home, which means I’m losing weight,” she said. ‘I have to look on the bright side of things, because you know what? Anyway, if you have to move, you have to pay. If you are hungry, you must eat. ‘

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