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Tuesday, March 28, 2023

Consumer: Nestlé wants to raise prices – Expert: Inflation remains high

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The food giant announces price increases again. Because he is also affected by inflation. One expert does not expect the problem of high inflation to be resolved quickly.

Products from the Swiss food giant Nestlé are likely to become more expensive again. “We have not yet fully passed on the additional costs incurred by us. There will therefore be further price increases,” said CEO Mark Schneider of the “Frankfurter Allgemeine Sonntagszeitung” (“FAS”).

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“Even if inflation is no longer as high as it was in 2022, we still have some catching up to do over the year as a whole,” said Schneider, explaining the upcoming price premiums despite slightly weakening inflation. The level of price increases depends, among other things, on how labor and energy costs develop.

At the end of 2022, inflation had slowed somewhat, but had reached a record high for the year as a whole. The head of Germany’s largest state bank believes that the fight against rising prices will continue for a long time. The head of the Landesbank Baden-Württemberg (LBBW), Rainer Neske, told the “Stuttgarter Zeitung” and the “Stuttgarter Nachrichten”. “It will take longer, and I hope that the European Central Bank has the breath to resist this for a long time.”

Nestlé is not raising prices for the first time

He currently sees many inflationary tendencies: The economic relations between the USA and China are difficult, so companies are rethinking their business in China. “Producing elsewhere will be more expensive in many cases.” There is also talk of making supply chains more adaptable. But that would require larger warehouses. The shortage of skilled workers is also a cost driver. “That’s why I think we have to fight inflation for a long time.”

Nestlé is not raising prices for the first time: in the first three quarters of the previous year, Nestlé sold 69.1 billion francs (70.4 billion euros) worldwide. On its own, i.e. acquisitions and exchange rate effects excluded, the increase in sales was 8.5 percent – this was also due to price increases. The group raised prices by an average of 7.5 percent, as well as volume increases of 1.0 percent, as Nestlé announced in October. The group will present annual figures for 2022 on February 16.

When asked whether Nestlé was taking advantage of the situation to increase the margin, Schneider said: “That’s not true. We are not the cause of this inflation, we are affected by it like every consumer.”

Source: Stern

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