American brands of confectionery products Mondelēz and Mars have warned retailers of their intention to raise shipping prices from February-March, Izvestia has learned. Thus, Mars, Snickers, Milky way and Bounty chocolates may rise in price by 16-19%, Korkunov candies - by 11-19%, Alpen Gold chocolate, Oreo cookies, 7 Days croissants and Barney cakes - by 5-15%. "Izvestia" has familiarized itself with the documents that foreign manufacturers of popular sweets have already sent to federal retail chains in Russia. According to the companies, the cost of products is rising due to the rise in the price of raw materials - cocoa beans and oil - on the stock exchange. Interestingly, domestic brands have not reported changes in the prices of their goods.
What sweets will rise in price first
Immediately two large American manufacturers of sweets, which operate in the country under Russian legal entities - Mondelēz and "Mars", have warned the federal trade that they are revising prices for their products, "Izvestia" has learned. Thus, on January 20, the company "Mars" (Russian legal entity of the American manufacturer Mars) sent a notice to its partners about the rise in price of some products from the basic price list, the increase should take place in two stages. The company believes that in the first approximation, prices should change from February 20 and then from March 24.
"We are facing unprecedented cost and production cost increases due to record high exchange prices for cocoa beans and cocoa products, as well as higher prices for other ingredients, rising logistics and operating costs, plus rising packaging costs and currency volatility," the company emphasized in the letter.
Exchange trends and the inflation outlook suggest that we should expect another commodity price hike in the future, the letter noted.
As a result, since the end of February, the cost of large bars will increase by 14%, standard bars - by 19%, other formats - from 13% to 19%, Skittles will increase in price by 12%, M&M's - up to 16% and so on. Starting March 24, the company plans to ship Korkunov candies with a new price tag - 14-19% more expensive depending on the weight of the product.
On February 13, retailers received a notice from Mondelēz (an American company with the Russian legal entity Mon'dalis Rus LLC): from April 1, it will index the price of products under the trademarks Alpen Gold, Milka and Vozdushny by 14.9%. The biscuit category will rise in price by 6-9% - these are brands Oreo, "Barney", TUC, "Jubilee", Bel Vita. Pastries will add 5-9%, these are, for example, 7 Days. The company explains such changes by a serious rise in the price of several items at once: for example, butter by 26-40% from April 2024 to mid-February, cocoa - by 39% from April 2024, and so on.
Interestingly, Mondelēz had already notified its partners in the fall of 2024 about the price revision, which was to happen from February 1. At that time, chocolate bars were to rise in price by a maximum of 15.7%, biscuits by almost 10%, and pastries by 9%. Among the reasons the manufacturer even then indicated the rise in the price of raw materials.
In 2023, experts estimated the top three leading companies by turnover, based on the data of the Federal Tax Service, as follows: "Mars", concern "Babaevsky", "Slavyanka".
The Russian office of Mondelēz told Izvestia that the company, like many other participants in the Russian food industry, is facing a number of economic challenges.
- Among the key factors affecting production costs are rising raw material prices, especially the unprecedented jump in the cost of cocoa beans, the associated increase in the cost of cocoa products, which has been ongoing since 2023, as well as a significant increase in the cost of production staff," it said. - We have had to adapt to these changes. We have had to raise selling prices, doing so in stages to minimize the impact on the end consumer.
The Association of Confectionery Industry Enterprises, which unites the leading manufacturers of the industry, did not respond to Izvestia's inquiry.
Why confectioners have revised their prices
The production of confectionery products in our country is actively developing, the Ministry of Agriculture told Izvestia. Last year, over 4.3 million tons of products were produced, which is 3.9% more than in 2023. Including the output of chocolate and sugar products reached 2.15 million tons with an increase of 3.5%.
- According to estimates of the industry community, today Russia ranks fifth in the world in confectionery production. At the same time, in recent years, our country has also seen an increase in the average per capita consumption of these products, - said the Ministry.
It should be noted that the share of cocoa beans in the cost of final products, as a rule, is higher for products of more premium segment. Accordingly, the rise in prices for cocoa beans to a lesser extent affects products containing a large proportion of other ingredients (nuts, fruits, sugar, dairy products, etc.), they added.
The key task for chains is to prevent unjustified price increases, the Association of Retail Trade Companies (ACORT) said. Retailers check all requests for increases for reasonableness. Retailers do not always accept the proposed price increase in full, and also agree with suppliers on the implementation of promotions and delays in the adoption of new prices, they said.
- Double growth of world prices for cocoa beans, increase of expenses for international transportation and labor costs have led to the growth of chocolate production costs - selling prices of chocolate manufacturers have increased by more than 20% over the last year. However, the correction of retail prices is slower due to the developed competition in the confectionery sector," it said.
"Izvestia" sent inquiries to the Ministry of Agriculture, as well as to leading retail chains - X5 group (Perekrestok and Pyaterochka stores), Magnit, Auchan and other companies.
Cocoa prices have been rising throughout the past year, reaching a record high in December, now the cost of products on the exchange exceeds $ 9 thousand per ton, which is 30.9% higher than last year's figure, said "Izvestia" executive director of the association "Rusprodsoyuz" Dmitry Vostrikov.
- Cocoa raw material remains a key component in these products for confectionery factories, accounting for at least 25% of milk chocolate and at least 60% of the cost of bitter chocolate. Accordingly, the rise in the price of raw materials, which are purchased for foreign currency, credit burden, rising logistics costs and other expenses seriously affect the price of confectionery production, - he said. - Confectioners are forced to adjust the selling price of chocolate products for objective market reasons.
Suppliers always provide retail chains with detailed information on production costs with confirmation of changes in each cost item: retailers do not consider unreasonable requests, the expert added. At the same time, even a reasonable adjustment of the input cost is partially accepted by retailers.
Indeed, the market is recording a record growth in the cost of cocoa beans due to their poor harvest in Africa and Latin America, so the problem with rising production costs will be relevant not only for foreign brands, Ilya Bereznyuk, managing partner of Agro and Food Communications, told Izvestia. Also, all companies producing sweets are faced with the costs that are now relevant for the entire agro-industrial complex sector - logistics and electricity, he reminded.
- Despite the fact that two foreign brands of manufacturers have a significant market share and have offered retail chains to raise the price of their products by up to 20%, customers are unlikely to find such a price increase on the shelf. Retailers will negotiate with their partners and lower this benchmark, " he said.
But the main consumers of chocolate and biscuit products will not refuse these products, people are ready to pay even for a brand that has increased in price, if it is ready to maintain the quality of its goods, the expert noted.
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