Thursday 17 February 2022

Price Rises Drive Growth At Nestlé, With More To Come

The world’s largest food manufacturer has posted its strongest growth in developed markets in a decade as it benefitted from price rises and robust demand for coffee, pet food, and vegan products.

Over the year to 31 December, Nestlé’s sales rose 7.5% on an organic basis to CHF87.1bn (€83.2bn), of which 2% came from price increases to offset “significant cost inflation”. This trend accelerated in the final quarter of the year, with prices up 3.1%.

The group stated that growth was also supported by continued momentum in retail sales, a steady recovery of out-of-home channels, and market share gains.

Nestlé’s coffee business was the single largest contributor to growth in 2021. Sales of Starbucks-branded products jumped 17.1% to CHF3.1bn, whilst the Nespresso division reported growth of 8.8% to CHF6.4bn

NamNews Implications:
  • Nestlé is big enough in most markets to be able to ensure appropriate price rises across its brand and retail portfolios.
  • “Significant cost inflation” has been factored into its price increases…
  • …in a “super volatile environment”.
  • Rivals need to reassess relative competitive appeal, by category, retailer and geography…
  • ..Now
#ShelfPriceInflation #CostPriceInflation #Negotiation #Power

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