Yahoo Finance Live details some of the latest consumer brands have raised their service fees or prices amid inflation, including Paramount, Coca-Cola, Kraft Heinz, and Nestle.
Video Transcript
- All right. Let's get you up to speed now on recent price hikes. You feel them. Paramount combating its rising costs by hiking the price for Paramount Plus. The ad free level, which will now include Showtime, is going from $9.99 to $11.99 per month. While the ad supported tier without Showtime is going from $4.99 to $5.99.
Also facing higher cost is Nestle. The company raised prices by 8.2% last year. But this didn't fully offset the impact of increased ingredients costs on its margins. The company's CEO, Mark Schneider, saying on a call with reporters, quote "Like all the consumers around the world, we've been hit by inflation. And now we're trying to repair the damage that has been done."
And when it comes to Nestle, don't sit there and just think about chocolate, think about Nescafe. Think about Purina quite frankly. And they saw sales volume down 2.6% in the fourth quarter, Shauna.
- Yeah. Certainly. It's interesting here just to take a look at the fact that some of these companies certainly diverging paths when it comes to the consumer. Whether or not they're going to continue passing along those price hikes. Coca-Cola and Kraft Heinz are two more of those companies that raised prices in 2022. Coca-Cola raised its prices by about 11% last year. The company saying that it's going to continue to raise prices this year. The rival Pepsi, on the other hand, is pausing a price hikes. Kraft Heinz, which raises prices by more than 15% last year, saying that they will not raise prices any further. At least for now. The company actually seeing a drop in sales by volume here. That drop was about 5% in its fiscal fourth quarter because of the price hikes as well as supply constraints.
So yes, their numbers on an overall basis, some of them, are impressive. But those volume numbers we've seen them dip at a number of companies. Kraft Heinz being the latest one. And I think consumers are paying closer attention to those price tags. That will be interesting to see whether or not Coca-Cola since they said they will continue raising prices, if they will see more of a backlash here over the coming quarters because of that.
- The Fed would like to see some positive story in all of this. They don't yet see it right now. We're talking generally speaking of these companies around a 2% to 3% decrease in volume or demand. And so, yes, the question is going forward, is this the only way they can keep those margins high? And the other question is, are they rising these costs beyond their cost increases? Or is this as some call it, Shauna, greedflation, which is really coming to play. A lot feel, think, with the price of eggs, which are up 70% year over year. And there is a question for the consumer. Are they rising these prices because their supplies, their costs are going up? Or just simply because we will pay it? And these are the questions the Fed needs answered.
- Yeah, exactly. And I think we're also getting a clearer picture on who has pricing power and who doesn't this quarter. Just strictly by the numbers. Strictly by the volume. So taking a look at Coca-Cola's latest earnings report, they clearly do have the pricing power. A number of analysts pointing to the fact that Coca-Cola is able to raise prices more than some of its peers just given the strength of their brand. So we'll see whether or not that does hit sales here in the coming quarters.
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