Businesses are Shying Away from Ingredient Cost Increases
by Chrysalis De Vera in Business on Aug 10, 2011
The ice cream business of Jim Capannari, which primarily sets on sugar, milk and butter fat still remains on its usual price despite price increases of such ingredients.
The business which is based in Illinois and other colleagues of Capannari’s felt that they can’t pass to the consumers the price increases, claiming that consumers would only give so much in a losing economy, not even for high-end treats such like Capannari’s ice cream.
Capannari expressed that it’s the intention of staying in business that becomes the bottom line of such situation. He went to his Chicago unit just to hang up a sign that explains why there is an increase of ten cents for the cones.
The high-fructose corn syrup costs increased over 22% and the prices of sugar also increased up to 20%. According to the U.S. Department of Agriculture, the prices of milk have also increased last year to an average of 38%, so it’s not a question on the abrupt increases of the raw materials of ice cream. However, the standard price of an ice cream, half of a gallon, has also risen to 7% that same time, according to the U.S. Bureau of Labor Statistics.
According to an expert on the dairy business and a Penn State University economist Jim Dunn, some factors in the increase of prices for ice cream’s raw materials are much similar with those for food as a whole; this includes a weak dollar which makes products of America to be more inexpensive abroad, global demand, and the high cost of corn mostly fed to dairy cattle.
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