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TheStreet Open House

15 Food Stocks Hit by Commodity Inflation

Stocks in this article: MKC DPS DRI CAG GIS HSY K MCD KFT SLE SBUX SJM PEP PNRA CMG

Kellogg

Kellogg (K)

Company Profile : Battle Creek, Mich.-based Kellogg and its subsidiaries are engaged in the manufacture and marketing of ready-to-eat cereal and convenience foods.

Kellogg forecast that 2011 would be another difficult year in terms of ingredient costs, and expects to experience a 7% increase in grains, sugar and packaging costs.

Kellogg recently raised prices to help offset rising ingredient costs. In its recent earnings report the maker of Corn Flakes cereal, Cheez-It crackers and Famous Amos cookies said it plans to raise prices again in 2011 in a range of 3% to 4%. It also hopes to sell a more favorable mix of higher-priced food items, products which boast wider margins.

Price increases were already implemented on Kellogg brands such as Eggo waffles, Keebler cookies and Pop-Tarts, as well as many of its cereal brands.

Even so, the food processor cautioned this month its margins would remain under pressure as a still-weak economy will lead it to carry some of the higher costs since raising prices could dissuade already-choosy consumers.

CEO John Bryant told Reuters that evidence of price increases boosting the company's sales volume remains to be seen.

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