Kellogg to Raise Snack Prices

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Kellogg to Raise Snack Prices

BATTLE CREEK, Mich. -- Snacking is about to become a more costly habit with Kellogg Co. on Monday becoming the second major food company to say it would raise its prices to retailers on cookies and crackers in the wake of rising commodity costs.

Kellogg plans to raise prices 3 percent to 4 percent on average on Keebler cookies and crackers, NutriGrain cereal bars and Rice Krispies treats, a Kellogg spokesman told Reuters. The price hikes, effective Dec. 30, come as food companies face rising prices for commodities such as wheat, cocoa, corn and soy oil. Rising employee benefits costs also prompted the price hike, a Kellogg spokesman said.

The announcement comes 10 days after rival Kraft Foods Inc. said it was raising prices on most of its Nabisco cookies and crackers by about 3 percent.

Commodity costs have risen this year after a severe drought in the U.S. Midwest led to a sharply lower harvest and five-year highs in wheat prices, according to the report.

Nabisco has about 40 percent of the cookie market and 47 percent of the cracker market, and Keebler has about 18 percent of the cookie market and about 26 percent of crackers, Merrill Lynch food industry analyst Leonard Teitelbaum said earlier this month. It remains to be seen if the price increases stick when products are on store shelves. Most grocers have tried to keep prices down as they compete with discount giant Wal-Mart Stores Inc., analysts said.

Christine McCracken, food industry analyst at Midwest Research, said that other packaged food companies are also likely to raise prices, which could make the Kellogg and Kraft increases more palatable to retailers.