I’ll take fries with that… Food giants McDonald’s, Coca-Cola, Kraft Heinz — aka McCocaKraft — reported better-than-expected sales this week, despite raising prices of fan favorites like Big Macs, Heinz ketchup, and Coke Zero. The deets:
- Less happy meals: McD’s jacked up prices by 6%, but big appetite for the new Saweetie Meal helped push sales 10% higher than pre-pandemic levels.
- More cheese for mac: Heinz raised prices for two-thirds of its products, from Kraft mac and cheese to Heinz ketchup — but still boosted profits and its annual forecast.
- Costlier Coke: Coca-Cola lifted the price of its bevvies, yet still sold more drinks than it did pre-pandemic thanks to global thirst for fizzy drinks like Fanta.
McDouble or nothing… Global food prices hit a 10-year high this month, straining low-income families and causing buyers to shell out up to 40% more for staples like PB. Rising costs of ingredients like beef and sugar also led food giants such as McCocaKraft to raise prices. General Mills and Chock Full O’Nuts tried to shrink or swap products to mask price hikes (#shrinkflation and #swapflation). But McCocaKraft chose the other option: good old-fashioned #flation.
The “staple advantage” is real… And Coke, McDonald’s, and Kraft are staples of US snack culture. Together, the tasty trio has a nearly $500B market cap — but their well-known brand names also have huge value. With inflation up across the board, many customers are willing to accept slightly higher prices for some go-to goodies like McNuggets, Diet Coke, and Bagel Bites. For smaller companies that haven’t reached “staple” status, it might prove harder to raise prices without hurting sales.