Nestle has issued a warning to consumers that more price rises could come into effect in a bid to tackle cost inflation. The KitKat and Shreddies maker had already increased prices by more than 5 per cent over the first three months of 2022 and may see further hikes
Mark Schneider, chief executive of the Swiss food group, said: “Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year.”
He added that Nestle saw a balance in continued customer demand regardless of the price increases. It reported an increase in organic sales by 7.6 per cent over the three months to march which was driven by a 5.2 per cent increase in pricing and a 2.3 per cent rise in volumes.
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According to the company, North America witnessed the harshest price increases of 8.5 per cent while European shoppers saw an average increase of 4.1 per cent. The company, which also owns Purina, revealed that its pet-care products were subject to the biggest price jumps, increasing by an average of 7.7 per cent in the first quarter.
Looking to the future, the company expects its overall sales to grow by this year despite the risk of further inflation related to the war in Ukraine. Mr Schneider said: “In these first months of the year, the war in Ukraine has caused unspeakable human suffering.
“We remain focused on supporting our colleagues there and providing humanitarian relief, while standing with the international community in the call for peace.”
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Hiking prices to keep things moving in the right direction in the wake of input cost inflation certainly won’t be a course of action management want to have to take.
“But nonetheless it’s the position Nestle finds itself in and doesn’t look likely to go away any time soon, which adds pressure to the group’s volume-led strategy. So far, volumes have still been able to move in the right direction aided by the recovery in out-of-home channels that saw demand drop off while restrictions were in place last year.”
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