Kraft Heinz CEO says people must get used to higher food prices

The head of food manufacturer Kraft Heinz says people must get used to higher food prices. According to Kraft Heinz CEO Miguel Patricio, the company is “raising prices, where necessary, around the world.” His comments follow a spike in energy and raw material prices alongside supply chain issues around the globe – prompting companies to increase prices.

During an interview with the BBC, Patricio defends the company’s decision to raise prices as a result of higher ingredient costs. According to the Food and Agriculture Organization (FAO), the higher cost of ingredients like cereals and oils have caused global prices to reach a 10-year high. Patricio adds that inflation is “across the board” unlike in previous years.

The Kraft Heinz CEO says that consumers must get used to higher food prices due to the world’s rising population and limited arable land to grow food. “We are raising prices, where necessary, around the world,” he says. Patricio adds that the company known for tomato sauce, ketchup and baked beans have raised prices in several countries – including the U.K. and the United States.

According to Patricio, a broad range of factors has contributed to Kraft Heinz’s decision. “Specifically in the U.K., with the lack of truck drivers. In the U.S., [logistics] costs also increased substantially, and there’s a shortage of labor in certain areas of the economy,” he tells the BBC.

However, the food company executive believes that not all cost increases should be passed on to customers. Patricio argues that firms would have to absorb some of the rise in costs. “I think it’s up to us, the industry and other companies to try to minimize these price increases,” he says.

Kraft Heinz and other food manufacturers have undergone various difficulties that make conditions ripe for higher food inflation. These include shortages, supply chain difficulties, labor issues, higher energy costs and rising commodity prices. (Related: Supply shortages aren’t unintentional – they’re actually planned.)

Higher food prices just one of many shoppers’ woes

ED&F Man Research Head Kona Haque says Kraft Heinz, Nestle, PepsiCo and other giant food producers “will most likely have to pass that cost on to consumers.” She adds: “It’s so widespread that everyone will do it, meaning they probably won’t lose customers.”

Haque also acknowledges the rising prices of food commodities and attributes these to several factors. “Whether it’s corn, sugar, coffee, soybeans, palm oil, you name it – all of these basic food commodities have been rising. Poor harvests in Brazil, which is one of the world’s biggest agricultural exporters, drought in Russia, reduced planting in the U.S. and stockpiling in China have combined with more expensive fertilizer, energy and shipping costs to push prices up.”

But higher food prices are just one of the woes shoppers in the U.K. and other parts of the world face. Shortages of food items in British supermarkets also threaten the upcoming holidays. According to a poll by British magazine The Grocer, 66 percent of people are concerned about shortages over the upcoming holidays. “It seems shoppers have heeded industry warnings over Christmas shortages,” the magazine writes.

The survey conducted by Lumina Intelligence on behalf of the magazine has found that of the poll’s 1,000 respondents, more than half express worry about not having enough food for Christmas. Fifty-six percent of participants say they are worried to some degree, while 10 percent say they are very worried.

Meanwhile, a third of the participants say they either had already begun stocking up on food items for Christmas or were planning to before October ends.

Even worse, more and more Britons are unable to find essential items. The British Office for National Statistics says that about 17 percent of people could not find certain supermarket items. It adds that as many as 25 percent of people have trouble finding essential food items. (Related: Global supply lines collapsing as factories face shortages in labor, materials.)

Collapse.news has more articles about how supply chain issues affect food prices in general.

Sources include:

ZeroHedge.com

BBC.com

TheSun.co.uk

TheGrocer.co.uk