International Business Writer
The CEO of Kraft Heinz, Miguel Patricio, warns the public that higher food prices are not changing in an interview with the BBC.
Numerous factors have resulted in Heinz, and many other companies, raising their food prices. The biggest contributors are an increase in the price of ingredients and a lack of labor internationally.
The high price of ingredients is a result of food production and the inability to keep up with increased demand. This is due to the world’s economies restarting in the wake of the pandemic, poor harvests around the world, and lack of land to grow food on for a heavily rising population.
According to Miguel Patricio, the lack of labor lies “Specifically in the UK, with the lack of truck drivers. In [the] US logistic costs also increased substantially, and there’s a shortage of labor in certain areas of the economy.”
These logistic costs in the US could be a result of the backlog of container ships waiting to enter the Port of Los Angeles. Around 250,000 containers require moving through the port as of October 6th, according to the port’s executive director Gene Seroka.
The pandemic has not been all bad for Heinz. As more and more people stay at home and cook as opposed to going out, its sales have seen an increase. However, a greater demand for Heinz products allows the company to raise its prices without fear of losing customers.
Patricio does not think that the burden of higher food prices should fall onto the customers entirely. He believes it is also up to the firms to absorb some of the damages and work towards minimizing prices.
Carlos Abrams-Rivera, the US zone president of Kraft Heinz, stated that the company is using “‘the full revenue management system’ including strategies such as price-pack architecture, and instituting ‘a design to value focus in our brands’.”
The company is working towards innovation to not only reduce prices for customers by selling old and buying new brands, and utilizing the full revenue management system but by attempting to minimize their plastic waste.
Heinz is reducing all-around plastic usage and is encouraging its consumers to buy glass bottles of ketchup over plastic bottles, despite it being more challenging to get ketchup out of these bottles.
Although the company is claiming to be in the process of reducing its plastic usage, there has been a 30% increase in plastic ketchup packet production due to the boost in takeout ordering during the pandemic.
While Patricio alleges the company is working towards maintaining food prices for their consumers, prices will continue to rise as long as prices of ingredients inflate.
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