After the competitor Unilever also predicts that it will raise prices in the coming year (for expansion), too
The Swiss Nestlé, the food giant, estimates that it will continue to raise prices this year as well. This statement from Nestlé comes after the company reported its results for 2022 in which it recorded a profit of 9.27 billion Swiss francs ($10 billion) on revenues of 94.4 billion francs ($102.3 billion). The company’s sales did increase by 8.4% compared to last year, but inflation eroded profitability and the company missed analysts’ expectations for a profit of 11.6 billion francs. Last year, Nestlé raised prices by 8.2%.
In the coming year, Nestlé expects a growth of 6-8% in sales, while the encouraging side for the company is that it deals with a market that ‘needs it in every world situation’ – people will continue to buy food to eat. It’s true that not all of these are mandatory products and you can definitely give up sweets, and it’s still food that people end up consuming, and don’t want to give up. According to the company, it was able to continue growing in the revenue line when “demand remained strong despite the increase in prices, and even though consumers could switch to cheaper products in various categories.” CEO Mark Schneider noted that coffee and pet care are the company’s “engines of growth” and are “holding up well”. are suspended during periods of economic uncertainty,” he added.
“We are looking at quite a few markets with interest, will the inflation there, which was mainly driven by energy and commodities, also translate into inflation of wage increases. Many countries are negotiating their annual contracts now, so this is something we are looking at with interest, like everyone else,” said Schneider . According to him, the company is expected to raise the prices, but he refused to say what percentage of the price increase is involved. “Our gross profit is down about 260 basis points – that’s very significant. This is after all the pricing we did in 2022,” Schneider said.
Nestlé is responsible for brands such as Nescafe instant coffee and KitKat chocolate bars. Here in Israel, Nestlé is the owner of Asem and the meaning is that prices are expected to continue to rise in Israel as well. In Israel, we are dealing with brands such as Bamba, Sabar, Fitness, Beasley, Petiver, Tivol, Argaliot and more.
On the other hand – it is possible that in the various countries in the world where the food giant operates, it will choose to raise prices according to the level of inflation in that country, and in this respect we may have an advantage in Israel because inflation here is still relatively low in the world. On the other hand, in the US inflation is in sharp decline (6.4%), and so is in Europe (8.5%), while in Israel it is still stable at 5.4%. In any case, the Bank of Israel expects a significant decrease in inflation in the coming year, when the bank estimates that inflation You will return within a year to the target area (1-3% per year).
In the past year, Nestlé’s most affected geographic area was the European market, where it experienced a 190 basis point loss. “Europe saw the spike in inflation coming, and the rise in energy prices, also and especially after the invasion of Ukraine. Thus, it is clear that part of the annual negotiations in the countries had already been done, and it was more difficult to initiate pricing actions afterwards.”
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