Consumers shrugged off price increases from three of the largest global food and beverage corporations, helping them bolster their bottom lines in the third quarter.
The Coca-Cola Company, McDonald’s and Kraft Heinz all reported quarterly earnings on Wednesday that were better than expected, despite continuing challenges with the global supply chain and pandemic restrictions in many parts of the world. The enormous scale of each business, as well as their ability to pass on price increases to consumers, appears to have helped them during a time of uncertainty.
“Global businesses have tremendous advantages because of their scale,” Mark Cohen, director of retail studies at Columbia Business School, said, while also noting that the unpredictable nature of the pandemic has made it harder for these companies to be as agile as they once were.
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Coca-Cola reported a net revenue of $10 billion in the three months ending in September, a 16 percent increase from the same quarter last year. The number of cases it sold grew 6 percent, resulting in greater volume than in 2019, though the share of its business tied to restaurants and dining out has not recovered to 2019 levels. The Delta variant of the coronavirus affected sales in several markets in August, the company said. In April, the chairman and chief executive, James Quincey, announced that the beverage maker would raise prices to cope with rising commodity costs, though the company has not yet disclosed specific details.
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McDonald’s reported a sales increase of 12.7 percent, compared with the same quarter last year, helped by larger customer orders and menu price increases in the United States, as well as fewer restaurant closings in Europe. The company expects to maintain a 6 percent increase for customers in the United States this year to cover increased costs for labor and commodities. Nearly 80 percent of the fast-food chain’s U.S. dining rooms have reopened, but reductions in operating hours and capacity continue to weigh on its business, the company said. McDonald’s restaurants in China and Australia have been particularly affected by pandemic lockdowns.
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Kraft Heinz reported that its net sales decreased in the quarter by 1.8 percent to $6.3 billion, compared with the same period last year. The company’s sale of its nut business to Hormel partially contributed to the decline. And, in a sign of rising inflation, the company increased prices 1.5 percent in its global restaurant and retail sectors. Kraft Heinz expects to enter next year “having executed the pricing plan that protects our profitability for current levels of cost,” Paulo Basilio, the company’s chief financial officer, said on a call with investors.
Americans are getting hit in the wallet as prices for food, gasoline and other consumer goods continue to rise. The surge in prices has created pressure on policymakers at the White House and the Federal Reserve, who have said that rising prices are temporary quirks caused by imbalances in supply and demand as the economy reopens.
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