Nestle has warned of price increases pretty much everywhere.
👉 Background: Nestle started 157 years under the name the Anglo-Swiss Condensed Milk Company. And today, Nestle is the world’s largest food company - making everything from Nescafe coffee to KitKats.
👉 What happened: In 2022, Nestle increased prices by over 8%, but this still wasn’t enough to offset the rise in its own costs - which has really hurt their profits.
👉 What else: So now, Nestle has warned of price increases pretty much everywhere. Think: coffee, water, milkshakes, brekky cereals and many other categories. But Nestle says it will only increase prices where “input cost inflation justifies that".
💡Consumer goods companies like Nestle have a difficult balance that they need to strike in the current environment.
💡We know that the increasing costs of raw materials are squeezing profit margins, but if the companies like Nestle raise prices too aggressively, they risk driving shoppers away.
💡Nestlé reported a drop in sales volumes in the second half of last year and said it was partly driven by pricing. Unilever also saw its sales volumes to decline by 2.1% in 2022. So while we may be past peak inflation, we may not be past peak prices.
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