beenz
Rap Guerilla
all these companies are using this as an opportunity to gouge consumers whether or not their cost have gone up. I'm calling bullshyt on EVERY single company needing to raise prices simultaneously.
I'm in supply chain dealing with the fukkery AMA; Update: Chip shortage until at least 2022
- Thread starter DrBanneker
- Start date
-
- Tags
- economy inflation supply chain
all these companies are using this as an opportunity to gouge consumers whether or not their cost have gone up. I'm calling bullshyt on EVERY single company needing to raise prices simultaneously.
Vandelay
Life is absurd. Lean into it.
Without giving too much away about who I am, and where I work now, I used to work for Kraft Heinz corporate fairly high up the organization in logistics 3 years ago. I've been in a few meetings with Bernardo Hees and Eduardo Pelleissone.
Kraft under 3G private equity was notorious...NOTORIOUS for cost-cutting. That being said, the food industry is an outlier. Kraft was barely a profitable company when looking at scale. Its part of the reason they got caught up in the SEC bullshyt 2 years ago and sold a few brands recently. This is the same for all food companies. The margins are absurdly slim, because there are expiration dates. I worked hand-in-hand with supply chain losses and know the dollar amounts and the cases counts they threw out annually, and it would make your head spin. Let's say roughly 20% of the stuff they produce in aggregate gets trashed in a good year...a good year. World class demand planning is 80% to forecast. We know 2020 was a bad year for everyone and Kraft was no exception.
There is some profit-reaching associated with the increases, especially as they try to recover from several quarters of either blowing their budgets or underselling to forecast. But the biggest factor is, they can't hire people for these jobs anymore. No one wants to work for $13-16 an hour on average that they paid for these gigs. You could make the argument that they should pay more, and I agree they should...but they're going to pass that along right to the consumer.
The harsh reality of a lot of manufacturing jobs and service roles in general is, yes we should pay employees more, but the other reality that no one wants to face is we have a general abundance of things that should actually cost more than we have been paying for decades.
There's an imbalance in the economy. Housing should not cost what it does, but this abundance of food, clothes, and other commodities should cost more.
Things have been unnaturally abundant for an abnormally long period of time.
1 of 3 things is our potential future.
- Prices will normalize to where they should've been all along globally due increased competition from other countries economies beginning to grow and we'll have to a more moderate consumption rate as consumers.
- The quality control and raw materials used to make finished goods...like food gets to a barely passable FDA standard to keep prices low; Kraft Mac and Cheese for instance wasn't actually made with real "cheese" until recently for instance.
- Other economies will have to collapse and/or largely be reliant on the US to maintain our hegemony and standard of living.
We are not supposed to be able to have shyt like avocados year round and an endless supply of steak or seafood whenever we want. The world just can't support that. And as 1.4 billion Chinese adopt a diet similar to the US, and 1 billion Indians 20 years after China, its not sustainable globally.
Red Shield
Global Domination
I figured Kraft woulda been real cheese back in the 90s not now.
But yeah it will definitely be a variation of all 3...
I would hope leadership would realize that and begin a controlled pullback... but we're probably gonna get a hard landing
MajesticLion
Veteran
Vandelay
Life is absurd. Lean into it.
I figured Kraft woulda been real cheese back in the 90s not now.
But yeah it will definitely be a variation of all 3...
I would hope leadership would realize that and begin a controlled pullback... but we're probably gonna get a hard landing
To my knowledge, and I was only there for 3 years; post merger with Heinz and I left right before the feds started scrutinizing their books, their ingredients would ebb and flow every so often. I believe they switched back to real cheese as a marketing ploy. "Now with real cheese!"
When I was there we had to cut costs on everything, without focusing on the brands. They packaged people out, cut corners, rebid every contract, sold multiple plants and buildings and consolidated where they could. It was a tough time, but it allowed me an opportunity to leapfrog my career.
So the first year after they laid mad people off, of course we looked like a superstar company, but with domestic food companies, there is no growth to be had. In advanced economies people buy what they're going to buy, and the dollars shift around a little bit year to year, but there is no true growth in that sector. Most advanced economies only grow 1-5% a year, so its not like tried and true F500's are going to see tremendous YOY growth.
Kraft Heinz has minimal presence in global markets because other countries, specifically Europe, have their own local brands that already occupy the space Kraft could go, and in emerging markets people consider American food to be trash so it would be too hard to enter with existing brands and too costly to start a new one.
No one is dying to purchase Kraft products, it's just their brands are so familiar it's what you grab when you go to the grocery store. People eat out or they shift to pre-made meal kits, that's where the sales growth is in the food industry.
So once they found out there was nothing else they could do to increase their profits, they went back and tried to grow their existing brands. Real cheese with the Mac...they tried some bullshyt with Oprah that didn't work too well, and they had the Crack an Egg breakfast. Other than that they had their usual tried and true staples, Heinz ketchup, Oscar Mayer, Capri Sun, Cool Whip, Ore-Ida potatoes, etc.
It's going to continue to cannibalize and fragment in these next few years, and quite honestly should from an ethical standpoint, in my opinion.
@DrBanneker any updates? how fuked are things still
Nvda and AMD stocks....word to the wise.
DrBanneker
Space is the Place
Still bad, the holidays are going to be interesting...one concern though is if this lasts into next year at what point do people stop spending? A recession on top of these other problems will be even worse.
InGodWeTrust
Tall & Handsome in ATL
Where would a breh benefit in investments with this supply chain stuff going on?
Check my posts above breh.
DrBanneker
Space is the Place
Well, some new shyt just started in the last few weeks...
We keep getting supplier price increases from 5-20% in anticipation of the end of the year. What is new though is typically once you get a price increase, it applies to all new orders. Now they are freezing shipments and saying any open (including late) orders will be invoiced at the new price and they won't ship otherwise.
This is foul. It also means price increases are going to flow down to the consumer much more rapidly. I wouldn't be shocked if everything gets jacked up post-Christmas. Some people are trying to hold back so holiday sales aren't hurt but come January 1st, the deluge.
We keep getting supplier price increases from 5-20% in anticipation of the end of the year. What is new though is typically once you get a price increase, it applies to all new orders. Now they are freezing shipments and saying any open (including late) orders will be invoiced at the new price and they won't ship otherwise.
This is foul. It also means price increases are going to flow down to the consumer much more rapidly. I wouldn't be shocked if everything gets jacked up post-Christmas. Some people are trying to hold back so holiday sales aren't hurt but come January 1st, the deluge.
That's ridiculous
How can they just change a price that's been agreed upon and started?
Good question.