Nestlé sales in the first nine months of this year did not live up to expectations. Sharp price increases are turning consumers to cheaper alternatives, causing volumes to shrink.
Prices to be differentiated
In the period from January to September, Nestlé posted an organic sales growth of 7.8 % – well below the 8.1 % that analysts had expected. The growth consisted entirely of price increases (+ 8.4 % on average), while volumes (expressed in terms of real internal growth) fell by 0.6 %, Reuters reports.
However, improvement is in sight as in the third quarter, that real internal growth fell only by 0.3 %. Nestlé is confident that the sum of volume and product mix will turn positive again, becoming the main growth driver again. Not that prices will necessarily fall: CEO Mark Schneider promises “more targeted pricing, by brand and by country”.
For the full year, the producer of Nescafé and KitKat is now counting on organic sales to grow between 7 and 8 %, with an underlying operating profit margin between 17.0 and 17.5 %. The FMCG giant says it is not (yet) feeling the consequences of the growing popularity of appetite suppressant drugs such as Ozempic, which Walmart and others recently warned about.