Expensive beer and fancy cars? Consumers and profits are okay with that
Consumers don’t seem intimidated by rising prices for everything from luxury cars to beer, allowing companies like Anheuser-Busch InBev and BMW to boost profits despite economic threats ranging from inflation to war. to the Covid outbreak in China.
AB InBev, the world’s largest brewer, on Thursday reported profit growth almost twice as high as analysts’ expectations. BMW’s first-quarter profits rose 12% on strong demand for luxury cars. Sales at Stellantis, formed by the merger of Fiat Chrysler and Peugeot, surged on strong demand for new high-end models like the Jeep Grand Cherokee.
As the costs of many raw materials rise amid bottlenecks, companies have tested how far they can raise prices after years of subdued inflation. Russia’s invasion of Ukraine has exacerbated shortages, cutting off supplies of some auto parts and cooking oils, while China’s continued Covid-zero policy has tightened demand and compounded food problems. supply chain.
Nestlé raised prices at the fastest pace in more than a decade during the first quarter, raising the cost of everything from Nespresso capsules to Purina dog food to mitigate the impact of the surge in food. food inflation on its profitability. Procter & Gamble and Danone also started the year with price increases of around 5%.
Like Budweiser owner AB InBev, brewers Heineken and Carlsberg posted sales growth above analysts’ estimates, driven largely by price increases. So far, drinkers returning to bars after lockdowns have not been deterred by the requirement to pay more, with soaring costs for brewers’ raw materials such as aluminum and barley.
“Inflation continues to move very quickly and is moving above or faster than expected,” AB InBev chief executive Michel Doukeris said by phone. It is “a little too early” to assess the resilience of beer demand, given that most of the brewer’s price increases were implemented late last year, he said.
Even British homebuilder Barratt Developments said on Thursday it had been able to raise prices enough to offset rising material costs.
Automakers have dramatically hiked prices after a strong rebound in demand as a shortage of semiconductors put a damper on vehicle production. With the number of buyers looking for a set of new wheels far outstripping the supply, prices have skyrocketed for both new and used vehicles.