Nestlé gets away with ‘responsible’ price increases

Over the first nine months of this year, Nestlé raised prices by 7.5% to absorb cost increases. For now, this does not weigh on volumes: in fact, the company is achieving its strongest growth since 2008.

“Responsible adjustments”

Nestlé posted revenues of 69.1 billion Swiss francs (almost 70.5 billion euros) for the first three quarters of this year, a 9.2% growth. Much of that growth was driven by price increases of 7.5%, but there was also 1% volume growth despite difficulties in the supply chain. Pet food division Purina was the strongest grower; brands such as Nescafé, Nespresso, KitKat and Garden Gourmet also performed strongly with double-digit growth.

“We delivered strong organic growth as we continued to adjust prices responsibly to reflect inflation,” said CEO Mark Schneider. “The challenging economic environment is a concern for many people and is impacting their purchasing power. That’s why we aim to keep products affordable and accessible while considering the interests of all our stakeholders.” The multinational is raising its outlook for the full financial year and is counting on organic sales growth of 8%.

Consumers continue to buy brands

Brand manufacturers are so far getting away with raising their prices, despite fierce resistance from supermarket chains that do not want to see prices rise excessively. Consumers are not giving up on their favourite brands (yet) even in times of high inflation and a dire energy crisis.

Last week, PepsiCo also published brilliant results: 9% sales growth despite 1% volume decline. The question is whether the A-brands can maintain this positive trend if the energy crisis lasts longer and really starts to weigh on family budgets.