Consumers around the world will pay even more in supermarkets and grocery stores this year than they did in 2022, according to retail groups, consumer goods companies and investors, unless the cost of goods falls or switches to cheaper products. will not accelerate the development of private labels. Retailers and consumer goods manufacturers have been in tough negotiations for more than a year, and friction began in 2021 due to supply chain disruptions due to the coronavirus. It has since turned into an ongoing war over the high cost of raw materials and energy following Russia’s invasion of Ukraine. And rising prices for staples from bread to milk to meat are exacerbating the cost-of-living crisis in Europe. In the four weeks to January 22, Britons paid 16.7% more for food than in the same period last year, according to research firm Kantar.

The US food index, including meals eaten at home, in cafes and restaurants, should rise by an incredible 10.4% by 2022. Mark Snyder, CEO of the world’s largest food group Nestle, told a German newspaper last week that food prices will have to rise even more this year to offset higher production costs that are not yet fully passed on to consumers. “Investors will pay a premium for companies that show in their portfolio that they can be valued without negatively impacting volume and market share,” said Jack Martin, fund manager at Oberon Investments.

The high margins of packaged goods companies have been eroded for more than a year by higher production costs as prices for ingredients such as wheat and sunflower oil have soared since the outbreak of the war in Ukraine last February. Unilever, which was due to release full-year results yesterday, said in October that its underlying price growth, calculated as a price index, had strengthened to a record 12.5% ​​in the third quarter of 2022. Nestle and dairy products giant Danone are due to announce results later this month. Tineke Fricke, portfolio manager at investment firm Waverton Investment Management, said Unilever will raise prices in 2023, albeit selectively. “It was clear from his previous statements that he prefers to sell fewer items at higher prices, keep prices below those of competitors, and increase market share,” Mr. Fricke said.

And industry analyst Bruno Montaigne of Bernstein stressed that manufacturing companies will continue to raise prices until they restore profitability. “The only thing that can stop this trend is a faster consumer shift to private label products, so if commodity prices continue to fall, then there may not be a need for further price increases.” Finally, in December, the CEO of Walmart, the world’s largest retailer, warned that some “packaged goods suppliers continue to show us that inflation will jump even further in 2023, surpassing the double-digit average this year.”