General Mills Inc. said Tuesday that it raised prices on selected products ranging from soups to yogurt by 2 to 9 percent.
The Golden Valley-based maker of Yoplait and Progresso needs to offset rising energy and ingredient costs, spokeswoman Marybeth Thorsgaard said.
In early June, General Mills told retailers that it will charge them more for products like Progresso soup, Pillsbury frozen breakfast items, and Bugles snacks.
Thorsgaard said the price increases apply only to specific products within each category, but she declined to name them. She noted that retailers set their own prices, but most retailers tend to pass such price increases on to customers.
General Mills' decision was not unexpected. Prices of commodities such as soybeans, wheat, butter, and coca, which form the basic ingredients of many foods, have climbed on world markets. Throw in higher fuel prices, and several food manufacturers have indicated they would raise prices.
"We have worked through a period of stable prices, so people are not used to dealing with the kind of commodity increases we are seeing," General Mills Chief Executive Steve Sanger told Wall Street analysts earlier this year.
"But it appears these ... increases are going to be with us for a while, and I think that is going to require companies to think differently about moving their prices up and making sure they maintain their margins in the process."
Last week, Hormel Foods Corp. of Austin began charging retailers 4.5 to 6.5 percent more on Dinty Moore beef stew, Hormel chili and Spam canned meat because of higher poultry, beef, and pork prices.
Food manufacturers raise prices very carefully. While price increases are designed to protect profit margins, companies also risk losing market share. Consumers who do not want to pay 25 or 50 cents more for soup may switch to a lower-priced brand or private-label product.
Perhaps for this reason, General Mills did not raise prices on its cereals. The company is locked in a fierce market share battle with rival Kellogg Co.Star Tribune/Thomas Lee
