June 25, 2022

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Nestlé starts the year with the biggest price increase in a decade and expects more hikes |  Economie

Nestlé starts the year with the biggest price increase in a decade and expects more hikes | Economie

Nestlé factory in Konolfingen (Switzerland).Arend Wegmann (Reuters)

The Swiss food group Nestle raised the prices of its products by 5.2% in the first quarter of the year compared to the same period in 2021, the largest increase since 2012, due to the general rise in costs, especially energy costs, according to I mentioned this Thursday. The company, which expects more increases in the coming months, thus joins the list of large consumer brands, such as Procter & Gamble and Danone (4.9%), which started the year with similar price increases to move consumers to the continuing rise in costs, especially energy costs.

The The inflationary escalation began to take shape after last summer And the war in Ukraine, which began in February, has exacerbated it. Prices are now at their highest level in four decades, and the damage is especially great in the case of food and supermarkets, which consume a lot of electricity, especially for refrigerated and frozen goods, and fuel for transportation. Until the end of 2021 they were trying to absorb part of the increases at the expense of their margins, to prevent users from changing their products to products that are cheaper than the competition, but it is becoming more and more difficult not to transfer the increase in costs to the final prices. In fact, Danone has already closed the last quarter of last year with Biggest price hike since 2014 (nearly 6%) and warned that increases will continue into 2022.

“Amidst a challenging environment, we delivered strong growth in organic sales,” said Mark Schneider, CEO of Nestlé, who defended that the company had raised prices “responsibly.” “Cost inflation continues to rise sharply, which will require further pricing and easing measures throughout the year,” it warned in a statement.

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Prices for all product categories of Nestlé, maker of Kit Kat and Perrier, increased between January and March compared to the first quarter of last year. The largest increases were recorded in pet food, packaged water, and ready meals. Prices rose in all regions (the highest in North America, 8.5%; in Europe 4.1% on average), except for China, where it fell 0.5%, according to data published by the company.

Overall, the food group’s income increased 5.4% during the first quarter of 2022, to 22,238 million Swiss francs (21,622 million euros), according to the multinational. As for Nespresso, its prices increased by 3.1%.

Looking at 2022 as a whole, the multinational has confirmed its forecast and expects to generate sales growth of around 5% and a core operating margin of between 17% and 17.5%.

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