Rising prices threaten profit margins at food companies

 

By Damian J. Troise, The Associated Press

via The Seattle Times (WA) - Nov. 18, 2021

 

Albertsons, Mondelez and Kroger are among a wide range of companies whose profits could be squeezed from rising food prices if inflation keeps running hot.

 

So far grocery stores, restaurants and food producers have passed along much of inflation’s impact to consumers, who have eaten most of the increase. The industry’s profit margins have been tightening throughout 2021 and analysts are growing concerned that margins could feel an even tighter pinch as companies absorb more of the persistently rising costs and consumers possibly change shopping habits to adapt.

 

Prices for U.S. consumers jumped 6.2% in October compared with a year earlier, leaving families facing the highest inflation rate since 1990.

 

“We’re getting into this situation where we have spiraling inflation,” said Jay Hatfield, CEO of Infrastructure Capital Advisors. “Inflation in one area drives inflation in another.”

 

Raw materials costs have been rising throughout various industries, including food. Prices for wheat are at their highest levels in 8 years...

 

... Several big food producers have taken measures to shore up their profit margins through the year, which are mostly back to normal levels after an exceptional 2020 when the grocery industry got a boost from more people cooking and eating at home during the worst of the pandemic...

 

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https://www.seattletimes.com/business/rising-prices-threaten-profit-margins-at-food-companies/