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According to Miguel Patricio, chief executive of food giant Kraft Heinz, consumers worldwide will have to factor in rising food prices.
Higher costs
In an interview with the BBC, Patricio said that the American company would increase its prices in several countries. More than half of Kraft Heinz products have already become more expensive in its American home market, and the same is about to happen elsewhere. “We are raising prices, where necessary, around the world”, he said.
According to the UN Food and Agriculture Organisation, prices for ingredients such as grains and oils have reached their highest level in ten years. During the Covid-19 pandemic, many countries saw a drop in the production of raw materials as he measures to control the virus, but also illness, had constrained production and supply. Now that economies are back on track, the supply of these products has not been able to keep up with the returning demand, which has led to higher prices. In addition, wages (due to the shortage in the labour market) and energy prices have also risen.
Not passing on all costs to consumers
This array of factors contributes to rising food prices, Patricio says. “Consumers will need to get used to higher food prices given that the world’s population is rising whilst the amount of land on which to grow food is not.”
Yet, not all cost increases should be passed on to consumers, the CEO believes. “I think it’s up to us, and to the industry, and to the other companies to try to minimise these price increases”, he said. In that regard, he also expects much from technological innovation in the somewhat longer term, which could further improve productivity in food production.
Recently, several other food giants have already announced price increases, , including Coca-Cola and PepsiCo. As almost all raw materials and ingredients became more expensive, more companies may well follow suit.
