Which consumers brands, services are the latest to raise prices amid persisting inflation
Details from Yahoo Finance Live: Some of the latest consumer brands have increased their service fees or prices amidst inflation, including Paramount, Coca-Cola, Kraft Heinz and Nestle.
video transcript
– In order. Now let us update you on the latest price increases. you feel them Paramount combats its rising costs by raising the price of Paramount Plus. The ad-free tier, which now includes Showtime, goes from $9.99 to $11.99 per month. While the ad-supported tier without Showtime goes from $4.99 to $5.99.
Nestle is also facing higher costs. The company increased prices by 8.2% last year. However, this could not fully offset the impact of increased ingredient costs on margins. Speaking to reporters over the phone, the company’s CEO, Mark Schneider, said: “Like all consumers around the world, we have been hit by inflation. And now we are trying to repair the damage done.”
And when it comes to Nestle, don’t just sit there and think chocolate, think Nescafe. Think Purina openly. And they posted a 2.6% decline in sales volume in the fourth quarter, Shauna.
– Yes. Surely. It’s interesting to just glimpse here that some of these companies are certainly taking different paths when it comes to the consumer. Whether they will pass these price increases on or not. Coca-Cola and Kraft Heinz are two other companies that have hiked prices in 2022. Coca-Cola has increased its prices by about 11% over the past year. The company announces that it will increase prices further this year. The rival Pepsi, on the other hand, is pausing with price increases. Kraft Heinz, which has increased prices by more than 15% over the past year, said they will not raise prices any further. At least for now. The company is actually seeing a drop in sales by volume here. This decline was approximately 5% in the fiscal fourth quarter due to price increases and supply shortages.
So yes, their numbers overall, some of them, are impressive. But we’ve seen these volume numbers at a number of companies. Kraft Heinz is the newest. And I think consumers are paying more attention to these price tags. It will be interesting to see whether or not Coca-Cola, since they said they will continue to raise prices, will see a major backlash here in the coming quarters.
– The Fed would like to see a positive story in all of this. You don’t see it at the moment. We’re generally talking about a volume or demand drop from these companies of around 2% to 3%. And so, yes, the question goes on, is this the only way they can keep those margins high? And the other question is, are they increasing those costs beyond their cost increases? Or is this, as some call it, Shauna, greedflation really playing out. Many are feeling, thinking, with egg prices up 70% year over year. And there is a question for the consumer. Are they raising those prices because their inventories, their costs, are going up? Or just because we pay for it? And those are the questions the Fed must have answered.
– Yes, exactly. And I think we’re also getting a clearer picture of who has pricing power this quarter and who doesn’t. Strictly by numbers only. Strictly by volume. So if you look at Coca-Cola’s latest earnings report, they clearly have the pricing power. A number of analysts point out that the strength of its brand means that Coca-Cola is able to raise prices more than some of its peers. So we’ll see if that translates to revenue here in the coming quarters or not.