Product manufacturers have notified retailers of price increases of 5-20% from the beginning of 2024
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As Kommersant learned, manufacturers and distributors have notified retailers of an increase of 5-20% in selling prices for a wide range of goods from the beginning of next year on a wide range of goods – from dairy products, coffee, juices, rice to confectionery. Companies argue for this by the rise in exchange rates, which affects the costs of imported raw materials, and the rise in price of domestic transportation services by more than a third. Logistics specialists, in turn, talk about a serious increase in their costs for personnel, fleet renewal, warehouse rental, and do not see any prerequisites for reducing transportation tariffs in the foreseeable future. The Ministry of Agriculture emphasizes that “the situation is under special control.”
Kommersant obtained letters from a number of manufacturers about increasing selling prices from January 2024, sent from late November to mid-December 2023 to retail chains.
Thus, Wimm-Bill-Dann (manages the dairy assets of PepsiCo in the Russian Federation) reported an increase in prices by an average of 4.9% for dairy products, for juices – by 16.1%, and yogurt manufacturer Ehrmann – by 5%. Multon Partners (formerly Coca Cola) increases prices for soft drinks by 13%, Nestle for coffee and coffee drinks – by 15%, for confectionery – by 8%, for breakfast cereals – up to 9.5%, Lyubyatovo » for cookies – by 6%. Ritter Sport and Ferrero Rocher decided to raise chocolate prices by 7-14%. And the wholesale price of rice from its supplier Agroimport increases by 22%.
According to the chairman of the presidium of AKORT (which unites large grocery chains) Igor Karavaev, new prices are never “simultaneously broadcast to store shelves.” Each request from manufacturers and suppliers to change prices is considered up to 30 days, Lenta explains. In this network, as in X5 Group (Pyaterochka, Perekrestok, Chizhik), they say that they agree with counterparties to curb price increases, and if this is not possible, then they extend the process over time.
The Ministry of Agriculture assured Kommersant that the situation “is under the special control of the ministry,” adding that the dynamics of prices for individual products not produced in the country depends on changes in exchange rates. This is also what retailers’ counterparties focus on in their letters.
In the case of coffee, unfavorable conditions on world markets added to the mix. Thus, due to drought in Brazil, one of the world’s largest coffee suppliers, the cost of futures, for example, for robusta rose by 42% this year, Reuters reported.
It’s the same with rice, says Dmitry Volobuev, deputy director of grain trader Petrokhleb-Kuban: due to crop failure this year, India and Thailand closed its exports, and the Russian Federation imports up to 30–50% of this crop.
A paradoxical situation arose in the dairy market when in October purchase prices for raw milk were 0.2% lower, and the cost of its processing grew by 15% due to increased costs for related expenses. The situation is similar in other segments. Multon Partners informed retailers that the cost of the company’s products is also affected by an 11% increase in packaging prices.
The Union of Plastic Processors told Kommersant that in 2023 there was a “slight increase in packaging prices due to fluctuations in the ruble exchange rate.” At the same time, they say that if new environmental collection standards are adopted in the current version, polymer packaging in 2024 may rise in price by 15%. A Kommersant source in the industry, however, notes that packaging companies have already begun to raise prices, including this in their commercial offers.
However, the most acute situation has arisen with the transportation of goods within the country. Lyubyatovo writes that since the beginning of 2023, transportation costs have increased by 41.5%; Multon Partners speaks of an increase of 37%. A sharp increase in tariffs due to a shortage of vehicles began in June and already reached a maximum in October, the bakery product manufacturer Orient Products, which also notified the increase in wholesale prices, wrote in its letter to the chains.
While after the stabilization of international supply chains, tariffs for transportation from Europe and Asian countries decreased, within the country they, on the contrary, increased, confirms Alexey Misailov, director of business development for FM Logistic in the Russian Federation. Thus, tariffs for transportation from Moscow to St. Petersburg from March to December 2023 increased by more than 50%, to 70–110 thousand rubles. for a standard eurotruck, from Moscow to Krasnodar – by about 50%, to Rostov-on-Don – by almost 60%, adds Ali Gabidulin, head of the domestic Russian ground transportation department at Noytech Supply Chain Solutions.
Logisticians’ costs are also rising. They had to increase staff salaries by more than 50% due to their shortage, at least double the cost of updating the vehicle fleet and by 40% for renting warehouses, notes Deputy Executive Director of Courier Service Express Maria Martynova. After the peak fourth quarter, usually the level of tariffs, according to Alexey Misailov, “rolls back”, but he does not see any prerequisites for a full return to the 2022 tariffs.
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