Is the inflation rate really 10% ? .
Members of the Ding-a-ling Patrol insist gum is now 7% better than it was last year, so the real inflation rate is 3%.
Other Ding-a-lings claim that lazy socialist Wrigley's executives and workers are over-paid, thereby making this example invalid.
I think the reality is the inflation rate is closer to 10%, unless you can think in a ding-a-ling compliant manner.
Wrigley to raise prices an average 10 percent
news.moneycentral.msn.com
Chewing gum maker Wm. Wrigley Jr. Co. plans to raise prices by about 10 percent, on average, in the United States, the company said on Wednesday, becoming the latest U.S. food maker to increase prices in the wake of rising costs.
Executives for the world's largest chewing gum maker noted the company has traditionally been conservative when it comes to price increases.
"We thought now was the right time to make a move in the U.S.," Reuben Gamoran, chief financial officer, said during the company's annual shareholder meeting.
Wrigley competitor Cadbury Schweppes Plc , maker of Trident and Dentyne chewing gums, recently announced it would substantially increase selected gum prices in the United States.
Food companies have been hit by surging corn prices as that crop is used in ethanol, which has raised the cost of high fructose corn syrup, a widely used sweetener.
Gamoran conceded that the price increase could hurt gum sales volumes in the short term.
The price increase also comes as Wrigley tries to improve its margins, which have shrunk as the company has added more lower-margin candy products to what has traditionally been a higher-margin chewing gum business. In 2006, the company said gross margin fell to 51.9 percent compared with 54.2 percent in 2005.
Wrigley is also facing increased competition from Cadbury, which has spent money to reinvigorate the chewing gum business it bought in 2003. Cadbury said last week its share of the U.S. chewing gum market rose to 32.7 percent in January, compared with the 27 percent share the business had when the company bought it in 2003.
Cadbury also has launched new products in Britain as it tries to cut into what has been a near monopoly for Wrigley.
Wrigley executives said that the company has met the competition with new products of its own and that trying to take market share from Wrigley will be a tough and expensive proposition.
"We meet competition head on and aggressively drive our own growth," Chairman Bill Wrigley Jr. said. Wrigley shares were up 98 cents, or 2 percent, at $50.04 on Wednesday on the New York Stock Exchange.
Copyright 2007 Reuters |
