Mondelez International, which makes Oreo cookies, Ritz crackers and other snack foods and candy, said it would raise the cost of many products in the U.S. next year to offset rising freight and commodity costs.
Mondelez is one of many packaged-food companies grappling with inflationary costs that are hurting profits. General Mills, Unilever, Kraft Heinz and Hostess, among other companies, also have announced price increases in recent months.
Mondelez's plan to raise prices was considered significant by some analysts who cover the company. U.S. retailers have been reluctant in recent years to pass on costs to consumers because of intense competition in the grocery business.
"That (Mondelez) was able to take this pricing is a positive industry development, in our view," Ken Goldman, an analyst with J.P. Morgan who covers the food industry, said Tuesday in a research note.
On a call with analysts Monday, Mondelez CEO Dirk Van de Put said the company would employ reduced promotions, different packaging, and straight price increases.
"We believe that it's the right move for us, seeing the overall environment and the way our categories are behaving at the moment. It will allow us to make the right investments in our brands and in our categories. So at this stage, we think that is probably the best way to do it," Van de Put said, according to a transcript of the earnings call.
Erin Lash, a Morningstar analyst, said Mondelez remains well-positioned for long-term sales and profit gains.
"From our vantage point ... its entrenched retail relationships, the resources it invests behind its leading brand mix and expansive global scale should ensure Mondelez withstands these headwinds longer term," Lash said in a research note.
