KFT’s Prices Enter “Uncharted Territory”

KFT management stated today that their Q2 volume held up well “even in the phase of unprecedented pricing actions.” Despite these already significant price increases, the company raised prices as it entered 3Q in an effort to cover higher input costs and anticipates pricing will remain the primary driver of revenue growth in the near-term. Management highlighted that it has led the way with cost driven pricing actions and that its competitors are now starting to play catch up and narrow the gap so consumers will begin to face higher prices across the board.

Tyson management also alluded to more pain for the consumer’s wallet when it said earlier today, “The consumer really hasn’t felt the effect of the $6-$7 grain market yet. Either on beef, pork or chicken.”
  • Positive for restaurants: Increased prices at the grocery store can only help restaurants going forward.
  • Negative for restaurants: KFT also said that
    Mac & Cheese, which management called its “icon of value oriented mean solutions” grew nearly 20% in the quarter.

    Higher chicken and beef prices for the consumer also translate into higher costs for restaurant operators.