Nestlé Hikes Prices by 6.5 Percent

In the first six months of the year, Swiss food giant Nestlé grew organic sales by 8.1 percent. This was largely driven by increased prices, which were raised by 6.5 percent to partially offset what the group described as an unprecedented increase in expenses.

Nestlé CEO, Mark Schneider revealed the higher cost of goods sold was driven by increased commodity, labour, and energy expenses that “hit us like a freight train”.

“The situation was difficult before, but the war on Ukraine brought this to a whole new and unforeseen level, in particular for the food industry,” he expressed.

While pricing action might have felt steep to shoppers at the checkout, Nestlé stressed it made a point of acting responsibly in its price increases.

“I believe we handled the situation well under the circumstances and found a reasonable balance between maintaining growth and protecting the bottom line,” Schneider continued.

“This brings me to a key challenge at this time of increasing food insecurity and that is improving access to affordable, high-quality nutrition. The combination of the pandemic and the war in Ukraine has wiped out much of the progress over the past decade in this important area. This is a time when help is needed.”

Food insecurity is increasing globally. According to NGO Action Against Hunger, 828 million people don’t have enough food to eat, that’s almost 10 percent of the world’s population.

With Nestlé’s long-standing presence in developing countries, Schneider said the company sees many opportunities to do good and to do well at the same time by offering affordable nutrition to lower-income consumers.

The company grew organic sales in emerging markets by 10 percent on the back of process that it raised by 6.6 percent. In developed markets, Nestlé bumped prices by 6.3 percent, while in real internal growth – a measure that strips out pricing – increased 0.5 percent.

On a group-wide basis, net profit totalled CHF5.2bn in for the six-month period. Underlying earnings per share increased by 8.1 percent on a constant currency basis.