During an economic downturn, it would seem that food companies would be pretty safe from dropping sales. Everyone has to eat and put food on the table, even when money is a little tight. With more and more families paying closer attention to their budget, a lot of them are opting to eat at home instead of dining out. The increased interest in packaged products has helped increase sales for Kraft Foods, Inc. However, even with more people cooking and eating at home, the company still decided to raise their prices.
An article featured in USA Today reveals that prices for cheese are between six to thirty-three percent higher today than they were just one year ago. Kraft has also raised prices on crackers, salad dressings, frozen pizzas, and other products. These price increases are said to be contributing about seven percent of the company’s increase in revenue.
Thus far, the move has worked for Kraft. Consumers withstood the price increases and Kraft reported a profit increase today of over 4%. The company’s stock has shown positive results, as well. While the move may work well in countering the rising costs of production, it may not be good for consumers in the long term, who must adjust to rising costs of both fuel and food during unfavorable economic conditions.