The boss at Kraft Heinz said that people must adjust to the higher prices of food.
Miguel Patricio claimed that the global food giant which makes tomato sauces and baked beans was raising prices in several other countries.
He said that inflation is now “across all levels” unlike previous years.
According to UN World Food Organisation, the global food price has reached a 10 year high due to rising costs of cereals and oil.
Kraft Heinz increased the prices of more than half its US products, which is its main market. Mr Patricio also admitted that this was happening elsewhere.
He said, “We are increasing prices around the world, when necessary.”
Many countries experienced a drop in production of crops and vegetable oils during the pandemic. Both illness and the virus were controlled through measures which limited production and delivery.
Higher prices have resulted from the fact that as economies recover, their supply hasn’t kept up with demand. Manufacturers have been hit hard by rising wages and higher energy costs.
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According to Patricio this wide variety of factors contributes to rising food prices.
“Especially the UK because there are not enough truck drivers. In [the]The US has seen an increase in logistic costs and a lack of labor in some areas.
Patricio said that food prices will rise as the population of the world is increasing, but the land used for food production is decreasing.
The longer-term “there are many technological advances that can be made to enhance the productivity of farmers,” which will prove to be a boon.
According to Mr Patricio, not all costs should be passed onto consumers. The cost increase would be absorbed by the firms.
He said, “I believe it’s up us and the industry to try and minimize these price rises.”
But big food producers like Kraft Heinz, Nestle and PepsiCo “will most likely have to pass that cost on to consumers” according to Kona Haque, head of research at the agricultural commodities firm ED&F Man.
She stated that all basic food commodities, including corn, sugar and coffee, as well as soybeans and palm oil have seen a rise in demand.
“Poor harvests from Brazil, one of the largest agricultural exporters in the world, combined with reduced planting in America and stockpiling by China, have pushed up prices.
She said that food producers will all be affected, and therefore they all will raise prices in the same way: “because it is so widespread that everybody will do it. This means they won’t lose any customers.”
PespsiCo, which warned that prices were rising this week for transport and raw materials, said it also faced increasing costs. They added that more price rises are likely to occur in the first year.
However, in addition to increasing costs, sales for Kraft Heinz brands did increase, according to Mr Patricio. This was because people are now cooking much more than before the pandemic.
Customers in the UK bought more Heinz Baked Beans, while customers in the US bought more Kraft Mac & Cheese. The overall sales increased 1.6% to $13bn during the first half, according to Erin Lash at Morningstar. This is compared to the similar pre-pandemic period of 2019. Although there was some slowdown in sales, it still showed improvement.
Under Mr Patricio’s leadership, the company has also been going through a major restructuring. This includes selling old brands and purchasing new brands. Ms Lash stated that this was “narrowing it focus and increasing its expenditure on innovation and marketing”, which will support future sales.
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According to Mr Patricio, the company was spending substantial sums of money on new packaging in order to achieve its goals on plastic waste reduction.
For example, plastic makes up the majority of the approximately 650,000,000 bottles of ketchup sold annually by the firm. M. Patricio claimed that they were “encouraged” to sell glass bottles, even though these are more convenient than plastic because you need to tap the bottom.
He added, “We are working hard on plastic bottles but also everywhere else in our footprint that contains plastic.”
Campaigners to eliminate plastic waste desire to see single serving sachets reduced.
Kraft Heinz increased production by 30% after facing a shortage in sachets due to the pandemic.
We are grateful that we were able to do that. [shortage]Patricio says the problem is solved. However, he said the company is currently working on an answer to reduce their plastic use.
Miguel Patricio can be seen in full on the “Watch Now” page.Aaron Heslehurst talks businessBBC World News Sunday, October 10th at 05.30 GMT and 16.30 GMT; Monday 07:30 GMT & 16:30 GMT; Thursday 07:30 GMT.
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