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Big Food Raking in Huge Profits From Price Hikes as US Hunger Persists: Analysis
"It's shameful that Americans are left food insecure and have to skip meals while corporations and their wealthy shareholders enjoy the spoils of supersized profits under unjustified price hikes."
May 10, 2023
As the U.S. government on Wednesday released its latest inflation report, the watchdog Accountable.US put out a new analysis detailing how Americans face food insecurity while major food corporations are padding their profits with price hikes.
"Big Food's staggering increase in earnings shows they did not need to raise prices so high on consumers but did so anyway to maximize record profits," said Liz Zelnick, director of Economic Security and Corporate Power at Accountable.US, in a statement.
"It's shameful that Americans are left food insecure and have to skip meals while corporations and their wealthy shareholders enjoy the spoils of supersized profits under unjustified price hikes," she added. "It's clear that the food industry will not hold itself accountable. It's time Congress do more to rein in corporate greed, one of the main factors currently driving up costs for families."
"It's time Congress do more to rein in corporate greed, one of the main factors currently driving up costs for families."
The Accountable.US report takes aim at General Mills, Kraft Heinz, and Mondelez—three of the top "at home" food companies in the United States based on market capitalization—focusing on January through March, the first quarter of this calendar year.
General Mills is one of a few companies that dominate the U.S. breakfast cereal market, with brands including Cocoa Puffs, Cookie Crisp, and Lucky Charms. Kraft Heinz is known for not only ketchup and macaroni and cheese but also Jell-O, Kool-Aid, and Philadelphia Cream Cheese. Mondelez's top brands include Chips Ahoy! and belVita.
The companies' combined net earnings for the quarter rose by 51% year-over-year (YoY) to a combined $3.47 billion, and the trio collectively spent over $1.3 billion on shareholder dividends, Accountable.US found. Of the three, only General Mills saw its earnings drop from the first three months of 2022 to the same period in 2023—though the company still spent more on dividends this year compared with last year.
The first three months of this calendar year were the third quarter of General Mills' 2023 fiscal year. Accountable.US cited Reuters' March 23 report that the company "raised its fiscal 2023 forecasts for a fourth time after beating estimates for quarterly results, helped by price increases and steady demand for its packaged-food products."
The watchdog also highlighted that General Mills "saw its net earnings increase by nearly $2 billion YoY for the first nine months of FY 2023, as the company spent over $2.16 billion on its shareholders through a combination of dividends and stock buybacks."
For Kraft Heinz, the watchdog referenced Reutersreporting earlier this month that it "raised its full-year profit forecast on Wednesday on the back of higher prices and sustained demand for its packaged food items." The analysis adds that the company "saw its Q1 2023 net income increase by 7.1% YoY to $837 million and spent $491 million on shareholder dividends."
Accountable.US noted that during the first quarter of this year, "Mondelez—which touted price hikes for its double-digit increases in revenue and earnings—returned $928 million to shareholders through a combination of dividends and stock buybacks, after reporting $2.1 billion in profits, a 143% increase from last year."
\u201cAs the #Fed mulls even more rate hikes, #Powell needs to finally recognize rate hikes will do NOTHING to address the MAIN driver of inflation: corporate greed. Rate hikes will only put more banks on the brink of collapse and risk massive unemployment. https://t.co/y2JIqScCUM\u201d— Ryan Summers (@Ryan Summers) 1683728189
The group used its new analysis to call out the Federal Reserve, saying that "the findings are the most recent evidence that while inflation is slowing, the Fed's single-minded policy of repeated interest rate hikes [is] doing little to contain the primary driver of rising costs—corporate greed."
The report also emphasizes recent admissions from economists that corporate greed is driving inflation—which progressive organizations and experts have been stressing for months in response to the Fed's interest rate hikes.
As the analysis points out, The Wall Street Journalreported earlier this month:
Consumers have... been unusually willing to accept higher prices lately. Paul Donovan, chief economist at UBS Global Wealth Management, said businesses are betting that consumers will go along because they know about supply bottlenecks and higher energy prices.
"They are confident that they can convince consumers that it isn't their fault, and it won't damage their brand," Mr. Donovan said.
According to the consumer price index report released Wednesday by the U.S. Bureau of Labor Statistics, "the food at home index fell 0.2%" from March to April. While cereals and bakery products saw a slight increase, there were decreases for milk; nonalcoholic beverages; fruits and vegetables; and meats, poultry, fish, and eggs.
However, the bureau's report also provides context from the past year: "The food at home index rose 7.1% over the last 12 months. The index for cereals and bakery products rose 12.4% over the 12 months ending in April. The remaining major grocery store food groups posted increases ranging from 2.0% (fruits and vegetables) to 10.4% (other food at home)."
The Accountable.US analysis notes that in January and February, "food-equity advocates warned that 'food insecurity for millions of American consumers is worsening' despite overall inflation easing, with higher numbers of food stamp recipients reporting 'skipping meals, eating less, and going to food banks to manage costs.'"
The U.S. Census Bureau has estimated throughout 2023 that based on household surveys, roughly 25 million people sometimes or often did not have enough to eat in the previous seven days. The U.S. Department of Agriculture reports that nearly 34 million people live in food-insecure households—though research published last month suggests that figure is likely an undercount.
Additionally, food insecurity figures don't provide a full picture of how many families struggle to stay fed, as Claire Babineaux-Fontenot, CEO of food bank network Feeding America, explained to CNN in March: "The nuance is that some people are not 'food insecure' because they get access to the charitable food system. That doesn't mean they're able to achieve self-sufficiency."
U.S. households are also contending with losing assistance related to the Covid-19 pandemic—including the end of the expanded child tax credit, universal free school meals, and increased Supplemental Nutrition Assistance Program (SNAP) benefits, formerly known as food stamps.
As Common Dreams reported in late February, while experts warned that the end to boosted SNAP benefits would cause a rise in U.S. poverty, Public Citizen president Robert Weissman declared that "a decent society would not let this happen."
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Nabisco Strike Ends After Union Members Approve New Contract
"Congratulations to these brave workers on their wins," said one labor writer. "May their determination and grit be an inspiration for workers everywhere."
Sep 19, 2021
A strike that started last month in Portland, Oregon and spread to other Nabisco bakeries and distribution centers across the United States ended Saturday after unionized workers voted "overwhelmingly" in favor of a new collective bargaining agreement.
Though some Portland employees opposed ratifying the four-year contract, calling for better terms, it ultimately garnered the necessary support from workers there and at facilities in Aurora, Colorado; Richmond, Virginia; Chicago, Illinois; and Norcross, Georgia.
Anthony Shelton, president of the Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union (BCTGM), confirmed the agreement with Nabisco's parent company, Mondelez International, in a statement Saturday.
"This has been a long and difficult fight for our striking members, their families, and our union," Shelton said. "Throughout the strike, our members displayed tremendous courage, grit, and determination."
\u201cThe Nabisco strike is over! Congratulations to these brave workers on their wins, may their determination and grit be an inspiration for workers everywhere\u201d— Kim Kelly (@Kim Kelly) 1632006722
Cameron Taylor, a business agent at BCTGM Local 364 in Portland, toldThe Oregonian on Saturday that about 75% of all members approved of the agreement with the snack giant, known for Oreo and Chips Ahoy! cookies, as well as Ritz and other crackers.
"What my members wanted was to hold on to their benefits," Taylor said, referencing that the deal scraps a new healthcare proposal and allows most workers to maintain their regular overtime schedule. He noted that "what the company did get was a weekend crew."
While BCTGM Local 364 vice president Michael Burlingham told the Portland Mercury that he was "not surprised" by the vote "but it's disappointing nonetheless," both he and Taylor still framed the development as an improvement in conditions for workers.
The strike "sent a message to all corporations that workers are not going to get pushed around, even if these corporations are multi-billion corporations," said Taylor. "I think the strike was a success, we couldn't accept what the company was stuck on... and we got them to move off of it."
After the votes were counted, Darlene Carpenter, a business agent for the union's Local 358 in Virginia, told the Richmond Times-Dispatch, "I'm ecstatic."
"This is a major win," Carpenter said, noting that workers will get a raise each year of the contract, higher company match to 401(k) contributions, and a $5,000 ratification bonus. "We have been like David, who took down Goliath, because people stood up for their beliefs."
Carpenter signaled that workers at her location are equally happy about the outcome, adding that "I just got off the phone with one of the workers and she started crying because she was so ecstatic."
Glen Walter, Mondelez's executive vice president and president of its North America operations, said that the company was "pleased" to reach an agreement that will "provide our union-represented colleagues with good wages and competitive benefits, while also positioning our U.S. bakeries and sales distribution facilities for future growth and success."
Amid the celebrations, Shelton acknowledged that the "striking members made enormous sacrifices in order to achieve a quality contract that preserves our union's high standards for wages, hours, and benefits for current and future Nabisco workers."
"Their sacrifice will benefit all BCTGM members and working people around the country for years to come," he continued. "Those brothers and sisters who walked the picket lines day in and day out are true BCTGM heroes."
The union leader also expressed gratitude for "the outpouring of fraternal support and solidarity we received from across the labor movement in the U.S. and around the world."
\u201cCongratulations to @BCTGM Nabisco workers, who have won a contract that reflects the fair wages, hours & benefits they deserve.\n\nOver the course of the strike, they made it clear: There is power in a union & we won\u2019t back down. Good contract, good snacks. https://t.co/PIQURavQT1\u201d— Liz Shuler (@Liz Shuler) 1632002256
"We offer our deepest gratitude to AFL-CIO president Liz Shuler for directing the full resources and power of the AFL-CIO at the federal, state, and local levels in support of our striking members and our union," he said. "This support was critical to the success of the strike."
"The BCTGM has shown, once again, that this union will do whatever it takes, make any sacrifice, take on any employer or adversary," Shelton added, "in order to preserve the rights and jobs of our members and the standard of living of BCTGM families."
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'No Contracts, No Snacks': Nabisco Workers on Strike Across US
"If Nabisco can rake in billions of dollars in corporate profits, they can afford to treat their workers with dignity and respect."
Aug 20, 2021
Employees at Nabisco's flagship plant in Chicago walked off the job Thursday, joining workers at three of the leading snack maker's other U.S. plants who are demanding better working conditions, an end to foreign outsourcing, and the withdrawal of a company plan that would scrap the company's current guaranteed overtime pay system.
"They don't care about frontline workers. They only care about the almighty dollar. We're tired of getting stepped on and treated like trash. We've had enough."
--Rusty Lewis, Nabisco worker
The strike began August 10 when around 200 members of the Bakery, Confectionery, Tobacco Workers, and Grain Millers' (BCTGM) International Union Local 364 walked out of a Nabisco factory in Portland, Oregon that makes Oreo and Chips Ahoy! cookies, as well as Ritz, Premium saltines, and other crackers.
Workers at Nabisco plants in Aurora, Colorado and Richmond, Virginia followed suit, saying they planned to strike until Nabisco's parent company, multinational confectionery corporation Mondelez International, agrees to negotiate a new contract. The most recent agreement expired in May.
With U.S. snack consumption rising during the pandemic, Mondelez's 2020 revenue increased to $26.6 billion, according to Chicago Business Journal, with profits of $3.6 billion and a 6% annual increase in share price. Dirk Van de Put, Mondelez's new CEO, could earn more than $17 million in compensation, plus a $38 million one-time windfall, this year.
Meanwhile, Nabisco workers have been forced to work 12 to 16 hour shifts, six to seven days a week, during the pandemic, while the company seeks to eliminate overtime pay by altering employee schedules so that weekend shifts become part of the 40-hour work week. Workers are also rejecting a Mondelez proposal to create different employee health plans under which new hires would pay more, including deductibles--which do not exist under the current system.
\u201cChicago @nabisco plant ON STRIKE! Support the #NabiscoStrike and American Jobs! \n@SenatorDurbin @SenDuckworth \nhttps://t.co/P6xFtpQkRt\u201d— BCTGM International (@BCTGM International) 1629407212
Nabisco workers stress that they are not asking for more pay or benefits.
"This fight is about maintaining what we already have," Mike Burlingham, vice president of BCTGM Local 364 in Portland, toldToday. "During the pandemic, we all were putting in a lot of hours, demand was higher, people were at home, and the snack food industry did phenomenally well. Mondelez made record profits and they want to thank us by closing two of the U.S. bakeries and telling the rest of us we have to take concessions, what kind of thanks is that?"
"We make them a lot of money," added Burlingham. "It's very disheartening. How is that supposed to make us feel?"
Workers say the proposed changes are the latest in a long line of affronts that began in 2016 when Mondelez laid off 600 workers while shutting down half of Nabisco's Chicago production lines and relocating operations to Mexico. In 2018, the company eliminated the pensions of thousands of workers and retirees, and this year over 1,000 jobs were lost when plants in Georgia and New Jersey were shuttered.
\u201c\u201cNo Oreos, no Chips Ahoy, no nothing!\u201d\n\nLove the \ud83d\udd25 of these strikers! Besides joining strike lines in PDX, Richmond, VA and Aurora, Colorado, solidarity can be shown through not buying outsourced Mondelez/Nabisco products. #1u\u201d— Read Reviving The Strike by Joe Burns \ud83e\udee1 (@Read Reviving The Strike by Joe Burns \ud83e\udee1) 1629249075
"They couldn't care less about us," striker Donna Marks, who has worked 17 years at the Portland plant, said of Mondelez in an interview with nwLaborPress.
"I used to enjoy this job, it used to be like a family to me," Marks told Willamette Week. "Now, they want us to work more and pay us less, and everything that we have, we have because we negotiated. They want to take away what we fought for with no negotiation. They act as if they gave us something."
Rusty Lewis, a striking worker at Nabisco's Aurora distribution center, told Motherboard that workplace conditions have been deteriorating during his 25-year tenure.
"It's gotten worse. It's gotten horrible. Horrible hours," he said. "They don't care about frontline workers. They only care about the almighty dollar. We're tired of getting stepped on and treated like trash. We've had enough."
Mondelez said in a statement that its goal "has been--and continues to be--to bargain in good faith with the BCTGM leadership across our U.S. bakeries and sales distribution facilities to reach new contracts that continue to provide our employees with good wages and competitive benefits, including quality, affordable healthcare, and [a] company-sponsored Enhanced Thrift Investment 401(k) Plan, while also taking steps to modernize some contract aspects which were written several decades ago."
The strike has drawn solidarity and support from BCTGM workers at Frito-Lay's Topeka, Kansas factory--who ended their nearly seven-week strike on Wednesday--as well as from other unions, activists, politicians, and celebrities.
\u201cWe are not going to let @MDLZ exploit its workers. Enough is enough! \n\nNo contract\ud83d\udcc4 \u2022 No snacks \ud83c\udf6a\u201d— Nina Turner (@Nina Turner) 1629462834
"I stand in solidarity with BCTGM workers in Oregon, Colorado, and Virginia who are on strike for a fair contract and for decent working conditions," Sen. Bernie Sanders (I-Vt.) tweeted Wednesday. "If Nabisco can rake in billions of dollars in corporate profits, they can afford to treat their workers with dignity and respect."
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