Nestle, the world’s largest food group, will raise prices again in 2023, according to CEO Mark Schneider. This is due to increased costs of ingredients, which have caused the company’s 2022 profit to miss market forecasts. Schneider stated that pricing increases are necessary to offset the impact of higher commodity prices. This news is not good for consumers, who have already been affected by inflation at multi-decade highs.
Last year, Nestle raised prices by 8.2%, but this was not enough to offset the impact of increased costs on margins. Similarly, Unilever has said they will continue to raise prices for detergents, soaps, and packaged food, but will ease those hikes in the second half of 2023. On the other hand, PepsiCo has announced that they will not be raising prices after multiple hikes in 2021 which helped them beat analyst estimates for profit and sales.
Net profit for Nestle fell to 9.3 billion Swiss francs, missing expectations of 11.6 billion francs. Analysts believe that the lower-than-estimated volumes are due to Nestle rethinking the variety of products they make and supply chain constraints. Schneider said that, in most cases, the impact to volumes did not signal consumers trading down to cheaper private label products.
For 2023, Nestle has targeted organic sales growth in a range of 6-8%. Reported sales for 2022 increased 8.4% to 94.4 billion Swiss francs ($102.31 billion).