From Bloomberg via Yahoo Finance, October 10:
Nestle SA and its rivals spent two years grappling with pandemic-related disruptions. Now the world’s biggest food companies are bracing for the next threat: a winter with too little gas to power their factories.
In response, the foodmakers are pleading their case to policy makers, cutting back on energy use and converting gas-fired plants to oil to keep Europe’s shelves filled with staples like cereal, bread and yogurt -- even if natural gas supplies dry up.
“Some companies will be lobbying governments on where in the hierarchy of energy users they sit,” said Will Hayllar, global managing partner at OC&C Strategy Consultants. “They will also take action to guarantee supply, installing their own generators for example,” and stockpiling fuel.
Russian President Vladimir Putin shook European industry when he slashed gas exports in response to sanctions over the invasion of Ukraine, with Austria, Germany and Italy the most vulnerable to a halt in supplies. That’s led not only to fears of winter shortages but also to soaring prices, driving up costs for makers of everything from chemicals to cars to baked goods.
Multinational food companies have been installing burners that can switch sites to oil from gas, including McDonald’s Corp. bun-maker Aryzta AG, whose freezers and bakeries are energy intensive. Germany’s family-owned Dr. Oetker, whose products range from frozen pizzas to baking powder, has also reduced energy consumption and added the option of using oil, where possible.
At Nestle, the cost of goods sold rose 14% in the first half, and the company expects a similar rate of growth for the full year. Prices of ingredients like palm oil and wheat have fallen from highs reached earlier this year, but gas remains more than twice as expensive as it was before Russia’s February invasion. Higher energy costs will also reduce how much consumers have to spend....
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If interested see also October 5's "(BIG) Food and (BIG) Money: The Market.ch Interviews Nestlé's CEO"
