Tough times call for compassion and mindfulness

Businesses and consumers need to demonstrate compassion and have mindfulness in today’s economic environment. In Pennsylvania, the average price for a gallon of regular unleaded gas is above $5.00. The price of food, clothing, housing, and other necessities continues to increase, putting more pressure on consumers. Inflation indicators and increased costs show little sign of slowing. With these challenges, business leaders need to be mindful of what consumers are facing and show compassion and understanding.

At the same time, while the largest corporations and tech companies have reported record-high profits, consumers need to be aware that is not the case for all businesses. Too often, news sources group all companies together to say, ‘corporate profits are up as consumers continue to struggle.’ This leads the general public to believe all companies raise prices to gouge consumers.

This is not the case in the consumer packaged goods industry or CPG. The industry has experienced price increases in production across the board. The majority of Unique Snacks’ costs of goods (COGs) to produce our snacks are based on the price of commodities. As the price for wheat, edible oil, paper, packaging and other items increase, our production cost increase. In addition to commodities, supply chain issues and outside factors such as the Russian invasion of Ukraine have had a huge impact on our business. Approximately 17% of the world’s wheat comes from those two countries. Ukraine is also one of the largest global producers of an edible oil, supplying 80% of the global supply of Sunflower products, and Sunflower Oil is a main ingredient in our pretzels. As a result of the war, 17% less wheat is available, and no sunflower products are being produced in Ukraine.

We would typically increase retail prices by approximately $0.10 every two or three years for standard inflation in pre-pandemic times. That increase would offset the rise in commodity prices and enable the business to provide salary increases for employees. Once we decide to do an increase due to the incurred increases, price increases typically take an additional three to four months to carry through to when retailers replace labels on store shelves. During that window, Unique Snacks absorbs the increased cost of production.

Since the pandemic’s beginning, we’ve had to increase prices twice. Even today, the business continues to absorb the increased cost of production. This was a mindful decision as we understand our customers are loyal, and they rely on us to provide them the best product at a fair price. We will never take advantage of that trust and, as a result, are still at a lower net profit than before the pandemic outbreak.

Over the last two years, we have become much more conscientious of how volatile costs can be and how global events can impact commodities. Being more aware of these issues helps business leaders be mindful of supply chain disruptions and understand the potential impacts beyond normal touch points. It is vital to measure all issues out multiple steps to figure out how your business will be affected.