Nestle To Batter Consumers With Price Hikes

The world's biggest food group Nestle (NESN.S) will lift prices again this year, Chief Executive Mark Schneider said, after costly ingredients made its 2022 profit miss market forecasts, John Revill and Richa Naidu reported for Reuters.

Photo Insert: The maker of Nescafe instant coffee and KitKat chocolate bars raised prices by 8.2% last year, but that did not fully offset the impact of increased costs for ingredients on margins.

Rivals have said they anticipate a more positive pricing outlook for shoppers in 2023. But Schneider said further rises were necessary to offset the impact of higher commodity prices.

That is bad news for consumers, whose spending power has already been hit by inflation at multi-decade highs.

The maker of Nescafe instant coffee and KitKat chocolate bars raised prices by 8.2% last year, but that did not fully offset the impact of increased costs for ingredients on margins.

"Our gross margin is down about 260 basis points - that is massive. That is after all the pricing we have done in 2022," Schneider told reporters.

Consumer goods producers increased prices to cope with surging costs for almost all raw materials after Russia's invasion of Ukraine compounded pandemic-related supply chain logjams.

But they face a challenge in how much they can increase prices before even affluent shoppers decide enough is enough. Unilever said last week it would continue to raise prices for its detergents, soaps and packaged food to offset rising input costs, but would ease those hikes in the second half of 2023.

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