Better grab those Oreos while you still can, and while they’re still relatively cheap.
With global supply chains ensnared by bottlenecks, Mondelez International (MDLZ) expects next year to be nearly as bad as the current one. The snack giant’s CFO addressed the labor and truck shortages mentioned in Mondelez’s third-quarter earnings results — and came around to a dispiriting conclusion.
Although some economists had predicted shipping bottleneck relief could arrive by year’s end, “quite frankly they haven’t got any better” in the early part of the fourth quarter, Luca Zaramella, Mondelēz International CFO told Yahoo Finance Live this week. He also warned that some product prices could rise in the face of global inflationary headwinds.
“I think when we look at supply chains across the world, there are inflationary pressures that are mostly due to the fact that there are several bottlenecks in supply chains that are globally interlinked,” Zaramella said.
“I expect this to continue into 2022, for the entire 2022,” the executive added. “I think the holiday season ahead of us will put even more strains on global supply chains.”
However, at the end of next year, there is some optimism for the company behind brands like Oreo and Cadbury, according to Zaramella.
“I think that we might see some things changing maybe into 2023, but quite honestly 2022, I believe is going to be a tough situation for global supply chains.”
Being ‘thoughtful’ on price hikes
On its Q3 earnings call, the company gave a heads up to U.S. consumers that they can expect a price increase of roughly 6 to 7% in the first quarter of 2022 due to inflationary pressures.
The company is implementing this increase “thoughtfully,” the CFO said.
“We have been somewhat implementing already some pricing,” he explained to Yahoo Finance.
“I think for consumers though, it is important to notice that as a company we are very thoughtful as we pass [the] price…In the end we believe that supporting a brand, making sure the quality is there, and having the right prices is absolutely the right strategy for us,” he added.
At the end of September, Mondelēz International reached an agreement with its union members on strike at three of four of its U.S.-based bakers. The resolution was an “important step in a broader effort to reset our U.S. supply chain,” according to a statement to Yahoo Finance.
According to the company, the four-year contracts between Mondelez unionized employees are retroactive to March 1, 2021. They include a ratification bonus for each employee, hourly wage increases each year of the contract, increased company match to 401(k) contributions, and updates to certain workplace policies.
From these strikes, the company expects an impact to be seen in the fourth quarter. Higher labor costs are another factor in rising inflation, and may end up passed along to the consumer.
“We are expecting some top-line headwinds from the impact of ongoing transportation and labor constraints with third-party logistics partners and manufacturers as well as the strike, which caused a decline in inventory levels,” according to Mondelez.
The company is optimistic that the new deal will provide a leg-up to improve “long-term competitiveness” in the marketplace, and provide its employees competitive pay and benefits and meet “ever-increasing and changing demands” from consumers.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at email@example.com.