NEW YORK (Reuters) - Breakfast staple Cream of Wheat and snack brand Pirate’s Booty will soon cost more as B&G Foods Inc (BGS.N) raises list prices for the first time in three years and curbs promotions, the food maker said on Wednesday.
Retail hikes of about a dime “across the board” will be in place by the end of May to cover freight costs which soared at the end of 2017, B&G Chief Executive Bob Cantwell said in a presentation at BMO’s Farm to Market conference in New York.
An 18 ounce Cream of Wheat Hot Cereal sells for about $4. A 4 ounce bag of Pirate’s Booty Baked Rice and Corn Puffs lists for about $3.
B&G, which also sells Green Giant vegetables and Ortega taco shells, last raised prices in January 2015, a company spokesman said in an emailed statement. B&G said in February that freight costs ate into its 2017 income of $217.5 million.
Food companies began to signal possible price hikes this year in response to soaring trucking and rail costs. Industry leaders Nestle (NESN.S), Procter & Gamble Co (PG.N) and Unilever Plc (ULVR.L) have refrained from doing so as the sector reels from changing consumer tastes and pressure from retail customers to keep prices low.
“It’s a pretty justifiable increase,” B&G Executive Vice President and Chief Operating Officer Kenneth Romanzi said in an interview on the sidelines of the conference. “Many customers demanded paperwork to see. It was pretty simple to show. We hadn’t taken (an increase)” in a few years.
The hikes should cover the new freight costs, which are likely to remain high, Romanzi said. Changes in trade promotions have been underway for months and the company does not anticipate any further price increases this year, he added.
Costs for making canned goods have also risen due to new tariffs from the Trump Administration on steel and aluminum. Those have largely been tempered by relatively benign inflation in other key commodities costs, he said.
(This version of the story corrects net income in paragraph 4 from $574 million to $217.5 million.)
Reporting by Chris Prentice; Editing by Richard Chang