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Tuesday, March 28, 2023

Nestlé: Grocery giant announces further price increases

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Food prices will continue to rise, says Nestlé CEO Mark Schneider in an interview. He defends himself against accusations of exploiting general inflation for higher profits.

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 “Frankfurter Allgemeine Sunday newspaper” (“FAS”). “Even if inflation is no longer as high as it was in 2022, we still have some catching up to do over the full year”, Schneider explained the upcoming price premiums despite a slight weakening of inflation. The level of price increases depends, among other things, on how labor and energy costs develop.

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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. Inflation will fall, but the question is whether it will return to a normal level towards two percent, said the head of Landesbank Baden-Württemberg (LBBW), Rainer Neske, who “Stuttgart newspaper” and the “Stuttgart News”. “That will take longer, and I hope that the European Central Bank will have the breath to resist this for a long 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. “However, 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 is why I believe that we will have to fight inflation for a long time.”

Nestlé: “We are not causing inflation”

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 if Nestlé was taking advantage of the situation to increase 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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