Volatile commodity prices and how our clients are responding
(Research scope: Nov – April 2011)
Date of publication
Article (click on title to go through to the article)
Costs to hit Unilever margins
30 April 2011
Just-Food
Unilever booked a 7% jump in first-quarter sales but warned that higher costs will dent profit margins this
year. The maker of Ben & Jerry's ice cream said that sales rose to EUR10.9bn during the first three
months of 2011, up from EUR10.1bn in the comparable period of last year. Sales gains were driven by
the group's operations in emerging markets, which helped to offset declining volumes in Western Europe.
The company issued a warning on the impact that higher input costs are expected to have during the
year. Input costs are now expected to rise by at least 5% during fiscal 2011, up from an earlier forecast of
4%, Unilever said. As a consequence, Unilever suggested that margins would be hit in the first half, but
added that it expected some recovery in the back half of the year. In an attempt to offset higher costs,
Unilever signalled that it is stepping up its cost-reduction efforts. The company said it hopes to cut
EUR1.3bn in costs this year, up from an earlier target of EUR1bn.
UNILEVER WILL CUT DEEPER TO COUNTER COMMODITY RISES
29 April 2011
Daily Mail:
UNILEVER has pledged to drive through a new round of cost-cutting after warning of sharply rising commodity pr
The soap-to-ice cream consumer goods firm spooked investors after stating that the price of key ingredients coul
by up ...
Relevant articles:
Daily Mail: UNILEVER WILL CUT DEEPER TO COUNTER COMMODITY RISES
The Daily Express: Unilever price rises to avert profits worries

29 April 2011
Associated Press
Newswires:
28 April 2011
Associated Press
Newswires:
28 April 2011
The Wall Street Journal:
28 April 2011
The Globe and Mail:
Procter & Gamble's 3Q net income rises 11 percent, narrows outlook on rising costs
CINCINNATI (AP) - Procter & Gamble Co. tempered its earnings outlook for the year Thursday because of fast-ri
costs for raw materials and fuel and the still-sluggish economies in the U.S. and other developed countries.
:
Unilever says sales Q1 up 7 percent to $16.1 billion, commodity costs pinching margin
AMSTERDAM (AP) - Unilever PLC, the maker of Dove soap, Lipton tea and Ben & Jerry's ice cream, reported Th
that strong demand in emerging markets helped sales rise 7 percent in the first quarter, but predicted sharper rise
Pepsi seeks to "thread the needle" on price increases
PepsiCo will increase prices this summer, but not enough to cover rising commodity costs, as the
company reported a 2% increase in snack and beverage sales for the first quarter while net profit fell to
$1.14 billion, from $1.43 billion a year earlier. "We're trying to thread the needle and see how much
pricing we can take," said PepsiCo chief Indra Nooyi.
Maple Leaf to raise prices
Maple Leaf CEO and President Michael McCain said the Canadian company will raise prices to offset
increased costs of raw materials, especially corn and wheat. "I am very respectful of the impact on
consumers," he said. "We try to be as sensitive to that as we possibly can be. We balance the initiatives
with passing on pricing with also reducing cost to try and mitigate that as much as we possibly can."
Nestle plans 4%-6% price hike for key products
26 April 2011
The Edge Financial Daily:
PETALING JAYA: The retail price for two key products in Malaysia’s food and beverage (F&B) sector, Milo and N
will increase by 4% to 6%, from May 1, according to a report by CIMB Research.

26 April 2011
The Wall Street Journal:
26 April 2011
The Wall Street Journal:
24 April 2011
Financial Chronicle:
23 April 2011
The New York Times:
12 April 2011
Reuters:
11 April 2011
Progressive Grocer:
8 April 2011
Dow Jones International
News:
Coca-Cola to raise prices in North America
Coca-Cola said it will increase prices on beverages in North America by 3% to 4% this year, while
predicting commodity prices could rise as much as $700 million. The company posted a first-quarter net
income increase of 18%, with revenue up 40% for the same period.
Diaper makers unfold price increases
Kimberly-Clark and Procter & Gamble are increasing prices on diapers and baby wipes. Though one
survey showed that only 10% of shoppers are switching to less-expensive brands, a price increase of 7%
for P&G's Pampers and 3% to 7% for Kimberly-Clark's Huggies carries risk for the companies.
Coke, Pepsi increase soft drink prices by up to 9%
...Soft drink majors PepsiCo and Coca-Cola have increased prices of their aerated beverages by up to nine per c
capitalise on rising summer sales....
Drivers of higher food prices likely won't go away
Food prices increased 3.9% in the country in February, and they have gone up 37% worldwide since
February 2010. Rising fuel prices, increased demand and global political and policy shifts are among
culprits. Food makers are increasing prices and shrinking portions, causing "an acute problem for food
manufacturers who have to try to explain this," said Gene Grabowski of Levick Strategic Communications,
which works with the food industry.
Unilever, citing higher costs, will raise prices
Unilever plans to increase prices on its consumer goods because "price rises for many raw materials are
a problem," said Harry Brouwer, who helms the business in Germany, Austria and Switzerland. "The
pressure from the cost side is currently around 2% or more, and we need to compensate for that with
price increases," he said.
Consumers find ways to save as food prices increase
A survey for Coupons.com shows that 99% of adults are aware that food prices are rising, and 95% plan
to use savings strategies when they shop for groceries. Coupon use is the most popular strategy, at 72%,
followed by price comparison, shopping at discount stores and stocking up when prices are low.
Givaudan Hiking Prices To Tackle Raw Materials Rise
ZURICH (Dow Jones)--Givaudan SA (GIVN.VX) the world's largest fragrance and flavorings company, Friday sai
bringing in price increases to offset raw material price inflation that it expects to continue throughout 2011.
Relevant articles:
Dow Jones International News: Givaudan Hiking Prices To Tackle Raw Materials Rise
Reuters News: UPDATE 3-Givaudan to hike prices as materials costs jump
Carlsberg readies for costlier raw materials
7 April 2011
The Edge Financial Daily:
2 April 2011
Reuters News:
2 April 2011
The Times of India Ahmedabad Edition:
SUBANG JAYA: Beer prices in Malaysia will go up by about 3 per cent from May to reflect higher raw material co
Carlsberg Brewery Malaysia Bhd says.
:
China tells Unilever to hold back on price rises-report
BEIJING, April 2 (Reuters) - China's state planning agency has told consumer giant Unilever to delay its plans to
prices in April as the government pursues its battle against rising inflation, the Financial Times reported ...
HUL hikes prices of laundry products
Mumbai: Consumers will have to pay more for laundry (detergent) purchases as rising input costs have
forced Hindustan Unilever (HUL) to hike prices on its leading brands Surf Excel Quick Wash, Rin and
Wheel.
MARKET TALK: Dr Pepper Getting Burned By Higher Oil Prices
30 March 2011
Dow Jones News Service:
12:48 (Dow Jones: Dr Pepper Snapple (DPS) indicates that higher oil prices are translating to higher costs for bo
plastic used to make bottles and fuel to ship products. While DPS executives, speaking at the Consumer Analyst
Europe ...
Hershey increases wholesale prices
30 March 2011
The Wall Street Journal:
Hershey said it raised wholesale prices for most of its products by about 9.7% to offset increased costs
for fuel and ingredients. Because the chocolate maker buys seasonally, it will see most of the financial
benefit in fiscal 2012, though it still expects 2011 net sales to rise between 3% and 5%, and earnings to
go up between 6% and 8%.
Wal-Mart CEO sees inflation ahead for U.S. consumers
30 March 2011
USA TODAY:
Consumers face higher prices in the coming months for food, clothing and other goods, Wal-Mart's U.S
CEO Bill Simon warned this week, adding that the chain is working with its suppliers to minimize the
impact of higher costs on consumers. Major retail chains such as Wal-Mart are likely to be in the
strongest position to do that, said John Long, a retail strategist at Kurt Salmon, but no merchants are
going to be able to shield their customers from inflation completely.

30 March 2011
The New York Times:

28 March 2011
Reuters:
On the Call: General Mills CEO discusses pricing
Many food companies and other businesses have indicated recently that they have needed to raise their prices to
with increasing costs. General Mills Inc. was asked about its pricing during a conference call on Wednesday.
US: Ralcorp to "accelerate" price hikes to offset input costs
23 March 2011
Just-Food:
US cereal-to-pasta group Ralcorp Holdings is aiming to "accelerate" the rate at which it pushes through price incr
to offset soaring commodity costs.
Nestle strategies provide commodity-cost protection
18 March 2011
Bloomberg:
Nestle CEO Paul Bulcke is pursuing a strategy of introducing higher-margin upscale products that are not
as susceptible to swings in commodity prices. The company also works closely with farmers, who helped
Nestle by warning of higher commodity prices as early as 2005.

28 February 2011
St. Paul Pioneer Press:
Food prices could drop as U.S. farmers plant more acres
U.S. farmers are expected to plant 91.839 million acres of corn this spring, up from 88.192 million a year
ago, and the increased yields could lead to lower food prices. However, analysts are not convinced that
the extra acreage is available.
23 March 2011
Associated Press
Newswires:
17 March 2011
The Wall Street Journal:
Hershey increases wholesale prices
Hershey said it raised wholesale prices for most of its products by about 9.7% to offset increased costs
for fuel and ingredients. Because the chocolate maker buys seasonally, it will see most of the financial
benefit in fiscal 2012, though it still expects 2011 net sales to rise between 3% and 5%, and earnings to
go up between 6% and 8%.
Kimberly-Clark announces price increases
Kimberly-Clark said it will raise prices for its Cottonelle and Scott brands by about 7%, and Huggies, PullUps and GoodNites by 3% to 7%. The new prices, effective June 19, were prompted by higher energy
and material costs.
STICKER SHOCK; Grocery consumers are finding higher prices on just about everyth
the store, and there's more to come
In nearly every supermarket aisle, food prices are starting to rise. General Mills just announced higher prices for
breakfast cereals, Yoplait yogurt and Nature Valley granola bars. Last month, it raised prices on flour, pizza rolls
Companies involved:
Relevant articles:
11 February 2011
Just-Food:
9 February 2011
SeattlePI.com/The
Associated Press:
General Mills Inc, Hormel Foods Corp
St. Paul Pioneer Press: STICKER SHOCK; Grocery consumers are finding higher prices
about everything in the store, and there's more to come.
US: Ralcorp to "accelerate" price hikes to offset input costs
US cereal-to-pasta group Ralcorp Holdings is aiming to "accelerate" the rate at which it pushes through price incr
to offset soaring commodity costs.
Higher sugar prices challenge small candy makers
As world sugar prices rise, farmers are benefiting and able to pay down loans and buy equipment.
Meanwhile, confectioners, particularly small ones, are being forced to raise their prices to reflect higher
commodity costs, such as sugar. "The small companies buy small amounts of sugar. And they buy that
sugar frequently," said the National Confectioners Association's Susan Smith.
2nd UPDATE: Kellogg Plans More Aggressive Price Increase
3 February 2011
Dow Jones Business
News:
Companies involved:
Relevant articles:
Kellogg Company, The Procter & Gamble Company
Dow Jones Business News: 2nd UPDATE: Kellogg Plans More Aggressive Price Increas
The Wall Street Journal Online: Kellogg Pushes Price Increases
U.N. predicts food prices will keep rising
3 February 2011
The New York Times:
A U.N. report says global food prices have gone up for seven months in a row and will probably continue
to rise until the results of next summer's harvest are known. "Uncertainty itself is a new factor in the
market that pushes up prices and will not push them down," said an official. "People don't trust anyone to
tell them about the harvest and the weather, so it has to await harvest time."

3 February 2011

The Wall Street Journal:
26 January 2011
MediaPost
Communications/Marketing
Daily:
Kellogg pushes price cuts
Kellogg plans across-the-board price increases: Kellogg is responding to increased
commodity costs and expects price increases across its products of up to 4 percentage points. The
company posted a fourth-quarter earnings increase of 7.4% but expects costs to rise 7% this year. CEO
John Bryant said, "If people are really price-sensitive, they should be really trading to the at-home eating
occasion."
Major brands raise prices as commodity costs increase
Producers are paying more for feedstock and commodities, which mean consumers will soon be paying
more for items including a meal at McDonald's and child products from companies such as Evenflo. Bob
Goldin, executive vice president of restaurant consultancy Technomic, called the across-the-board
increase unusual.
General Mills plans to raise prices
17 December 2010
The Wall Street Journal:
General Mills said that because of higher commodity costs, it will raise prices on hot snacks, frozen
vegetables and refrigerated baked goods starting Jan. 3. Chairman and CEO Ken Powell said the
increases will be "modest." "The consumer does, I think, continue to be careful," he said. The company
also plans to trim expenses to offset higher costs.
ConAgra plans more price increases
21 December 2010
Reuters:
ConAgra Foods, which posted a lower-than-expected profit in its second quarter and cut its 2011 forecast
for the second time, said it expects improvement from higher prices, increased productivity, new products
and lower costs. The company has already raised some prices and is planning to increase more. "We are
confident that the net effect of these pricing increases will be positive, despite some potential modest
volume decline," CEO Gary Rodkin said.
Higher food prices may squeeze Kroger's margins
2 December 2010
The Wall Street Journal:
Grocery chains have struggled this year with the inability to pass along significant food-price increases to
customers. Food-price inflation typically is beneficial for Kroger and other chains because it offers an
opportunity to increase profit margins, but attempts to raise prices during the economic downturn resulted
in fewer purchases by cost-conscious shoppers.
Increases in food prices are expected to accelerate
30 November 2010
The Indianapolis Star:
The USDA predicts food prices this year will rise 0.5% to 1.5%, and 2% to 3% next year. A study
discussed at the annual United Nations climate conference cites the effects of global warming, including
changing rain patterns, and population growth and demand, as factors that will drive up food prices this
century.

General Mills COO expects other food companies to raise prices, too
17 November 2010
The Wall Street
Journal/Dow Jones
Newswires:
Ian Friendly, chief operating officer of U.S. retail for General Mills, says the aggressive discounts of the
past few years are ending because of higher costs for wheat, corn and other ingredients. The company
has already raised prices on some cereals and baking products, and Friendly expects other companies to
do the same.
Date not available due to
error on website
The Washington Post/The
Associated Press:
Experts: Many factors are causing higher corn prices
With corn prices at more than $7 a bushel, up from $3.50 last summer, farmers and ethanol producers
are bracing for criticism that corn demand from the ethanol industry is driving up prices. Experts say the
high prices are because of a host of factors, including adverse weather and higher energy costs.