Why Mondelez Snack Prices Are Climbing Even Higher This Year

Snacks like Oreos, Chips Ahoy, and Wheat Thins could become even more expensive this year as Mondelez International realizes that its previous price hike was not enough to offset lost profits. Dirk Van de Put, Mondelez chief executive, told The Wall Street Journal that this is due to the ongoing and pandemic-induced pressure on the supply chain.

"[Suppliers] don't have enough for all of their customers, so they basically say, you'll have to pay what I tell you to pay," he explained. In other words, since Mondelez has to pay more to supply their products, people have to pay more to consume them. 

The WSJ notes that the company had already raised prices by 6 to 7% in January. However, new data showing losses of about 1% in profit proved greater than what the company had initially calculated. So, at some point in the upcoming year, the inflation happening throughout the food industry will impact snacks even more.

Mondelez walks a tightrope

Any follower of various food-related news stories will nod sagely at any mention of the ever-stricken supply chain. In December, for example, the BBC relayed an issue described by Annette Ball, Dare to Care's chief programmes officer: "Freight has doubled, even tripled [in price], in some instances." 

Issues — and increased costs — associated with various aspects of the supply chain are indeed an issue. However, that's not the only reason why we will pay more for Wheat Thins. As Van de Put noted to NBC when Mondelez first announced their intentions in November, people are spending more time at home, which means they are spending more time with snacks. In other words, consumer spending is higher, and companies can take advantage of supply being low due to disruptions at a time when those very disruptions are linked to a rocketing demand.

Two days after The Wall Street Journal covered the announcement, however, Van de Put was already signaling that he does not expect this price raise to be so easy. As he told Bloomberg, "[when consumers] start to spend more on other items, and they start to eat out more and so on ... that's where the moment comes that they might not be so benign as it relates to the price elasticity." So while current demand allows Mondelez to offload costs onto consumers, there may come a point where buyers won't take it anymore.