Nestlé says food prices will rise further this year


London (CNN) Nestlé, the world’s largest food group, Standard item increased further this year, A string of warnings from the consumer giant brings more pain stretched household.

The maker of Nescafé coffee and KitKat chocolate bars has raised prices by 8.2% in 2022, but says it won’t be enough to offset the increase. With its own costs that were squeezing profits.

“We are still in the process of repairing gross margins, and like all consumers around the world, we have been hit by inflation and we are now trying to repair the damage. Nestle (NSRGY) CEO Mark Schneider said at a press conference on Thursday:

Schneider added that the price increase would be “very targeted” and would only be implemented if “higher input costs justify it.”

Unilever (UL), coca cola (unit)brewer Heineken (Haney), Colgate Palmolive (CL) and Procter & Gamble (PG)Manufactures Pampers diapers and Pantene shampoos.

cost The share of raw materials such as energy, dairy and cereals has receded from its peak but remains high. Labor and logistics costs are also rising. This means that store prices are unlikely to drop anytime soon.

“Inflation is probably past its peak, but prices haven’t peaked yet,” Unilever Chief Financial Officer Graeme Pikesley said on a conference call with journalists last week.

Foods, including ice cream, will see significant price increases in 2023, CEO Alan Jope said in the same call.

UK-based Unilever, which makes Hermann’s mayonnaise, Knorr’s stock cubes and Ben & Jerry’s ice cream, 13.3% in the last three months of 2022, the eighth consecutive quarter of price increases.

delicate balance

Consumer goods companies find it difficult to strike a balance. Rising costs are putting pressure on profit margins, while raising prices too aggressively risks driving shoppers away.

Unilever says higher prices have reduced sales volume by 2.1% in 2022. Similarly, Nestlé reported a decline in sales volume in the second half of last year, which it said was partly due to pricing.

Heineken, on the other hand, said it hopes Europe’s beer sales are likely to decline this year due to ‘exponential’ price increases related to energy costs.

As shoppers try to keep their grocery bills down, a retailer’s private label may be the winner. walmart (WMT)for example saw strong growth The trend extends to European retailers with private label sales.

Jope said Unilever “has recently seen a rise in private label share in most European categories as the economic situation weighs heavily on shoppers.”

In addition to driving shoppers to private-label products, sharp price increases have led to tense negotiations between consumer goods companies and retailers.Jope said Unilever had “Firm” conversations with retailers.

On Thursday, Nestlé’s Schneider wasn’t drawn into the company’s details. It has spoken with the retailer, but confirmed that “intense negotiations are taking place.”

“Everyone has the same goal and that is to protect consumers from excessive inflation,” he said.

Controversy over pricing over the past year has resulted in some branded products being briefly removed from shelves.

During the price negotiations last summer, craft heinz (KHC) Suspends supply of some products such as tomato ketchup and baked beans to UK’s largest grocery retailer Tesco (TSCDF). At the time, Tesco said about the company’s price increase, “unfairOnce the product was restored, the price of Heinz’s most popular line remained unchanged.

Tesco chairman John Allen recently told the BBC that he had “clashed with other suppliers” over price increases.

A supermarket executive might see such squabbles as part of the job description. On Tuesday, Alexandre Bompard, his CEO at France’s largest grocery retailer, said: Carrefour (CRERF)said its role is to negotiate with suppliers and “make sure we limit the increase as much as possible to protect the purchasing power of our customers.”

Bompart added: The company plans to “significantly increase” its private label share to reach 40% of sales over the next three years.

“Trade-ins,” where shoppers buy cheaper versions of the same product, accelerated across all regions in 2022. Carrefour’s markets include Spain, Italy, Brazil, Argentina and Taiwan, he pointed out.

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