U.S. war on Iran<\/a> mean that the companies making everything from laundry detergent to soda \u200cand snacks face a balancing act to protect profit margins.<\/p>\nEven higher prices on everyday items will fuel concerns that inflation will persist into next year. High gas and grocery bills are a \u2060big factor in next week’s midterm elections.<\/p>\n
Soaring costs related to \u200bthe war are the latest headache for consumer goods, food and drink \u2060companies, which have struggled with lackluster sales since the pandemic, as shoppers have balked at increasingly expensive name-brand packaged food.<\/p>\n
Last year, they had to \u200ccontend with tariffs on imported goods \u200cimposed by President Donald Trump.<\/p>\n
“Pricing is the last lever these companies have left, and they’re pulling it into a \u2060consumer who’s already tapped out on paying more,” said David Wagner, head of equity and \u2060portfolio manager at PepsiCo investor Aptus Capital Advisors.<\/p>\n
On Tuesday, Coca-Cola CEO Henrique Braun said pressure on consumers could extend into 2027.<\/p>\n
“We are seeing elevated cost pressures driven by increased logistics and transportation costs,” he said as the company raised its annual profit forecast.<\/p>\n
How high can prices go?<\/p>\n
The challenge is working out how high prices can rise before shoppers walk away. The chair of Lindt & Spr\u00fcngli said the Swiss chocolate maker is struggling because it misjudged how consumers would respond to price increases. He spoke days after the company ousted its CEO over \u200cconcerns about its performance.<\/p>\n
Companies are running out of ways to absorb costs.<\/p>\n
Consumers in Europe and North America \u200bare particularly squeezed, said Reckitt CEO Kris Licht.<\/p>\n
He said companies must decide how much of the cost increase to pass on through pricing and how much to offset with more promotional spending.<\/p>\n
“We will probably have to price more at this level of commodity costs and input costs,” Licht said after the Durex maker trimmed its annual revenue forecast, sending its shares down around 5% on Tuesday.<\/p>\n
Procter & Gamble CFO Andre Schulten expressed a similar view after the Tide detergent maker last week hiked its expected hit to profit from rising raw material, energy and freight costs to $1.4 billion from $1 billion.<\/p>\n
“At this level of commodity pressure, the industry generally is pricing up because there is no way \u200bto recover this level of commodity pressure without pricing,” Schulten said.<\/p>\n
Procter & Gamble’s pricing and sales held steady in the last quarter, but higher costs really hurt margins, said Brian Mulberry, \u200cchief market strategist \u200cat Zacks Investment Management.<\/p>\n
“Consumers are \u2060still spending if they see the value, but we likely are near the upper limit of what consumers are willing to pay for snacks,” Mulberry said.<\/p>\n
PepsiCo has swung between price rises and cuts this year in an effort to boost sluggish sales and it suffered a margin hit last quarter.<\/p>\n
Raising prices risks losing customers. Nestle CFO Anna Manz said last week that volumes can dip in the short term when the company raises prices, as consumers \u200cadjust.<\/p>\n
“Looking forward, there’s now again some upward \u200bpressure on input costs,” Manz said as Nestle posted faster quarterly volume growth than \u200cpricing growth for the first time since \u20602024.<\/p>\n
“We’ll take pricing to the \u200bextent we can without damaging medium-term consumer penetration,” she said.<\/p>\n
Contributing: Juveria Tabassum<\/p>\n
\n The Key Takeaways for this article were generated with the assistance of large language models and reviewed by our editorial team. The article, itself, is solely human-written.\n <\/p>\n","protected":false},"excerpt":{"rendered":"NEW YORK \u2014 The world’s top consumer goods and food companies, from Coca-Cola and Procter & Gamble to…\n","protected":false},"author":2,"featured_media":896946,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,1302,3811,101,3812,134,3729,3,3813,3814,99,1505,2987,3324,2986],"class_list":["post-896945","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-cars","tag-classifieds","tag-economy","tag-homes","tag-jobs","tag-local","tag-news","tag-radio","tag-salt-lake","tag-sports","tag-television","tag-traffic","tag-utah","tag-weather"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/896945","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=896945"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/896945\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/896946"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=896945"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=896945"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=896945"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}