Nestlé sees resilient demand from shoppers despite Kit-Kat maker boosting prices
Kit-Kat maker Nestlé was the latest household name to declare that price increases for consumers had failed to offset demand, with sales surging.
The London-listed firm admitted it had put up prices 6.5 per cent this year but saw profits soar in six months regardless.
In half-year results, the consumer goods giant said total reported sales surged 9.2 per cent to 45.6bn in Swiss franc (£39.07bn).
Echoing peers like Coca-Cola and Unilever, the firm admitted prices had increased by 6.5 per cent “to reflect significant and unprecedented cost inflation.”
The company revealed underlying trading operating profit had been elevated six per cent to 7.7bn in the Swiss currency (£6.6bn), with growth driven by pet food brand Purina PetCare.
“In the first half of the year, we delivered strong organic growth and a significant increase in underlying earnings per share. Our local teams implemented price increases in a responsible manner,” Mark Schneider, Nestlé CEO, said.
There had been only “very limited” examples of consumers trading down in “certain categories and geographies,” Schneider told reporters on Thursday.
“But that doesn’t mean it couldn’t happen down the road, and that’s something that we need to watch in the second half,” he cautioned.
Industry rival Mondelez said this week that consumers were still keen to treat themselves to sugary treats while parring back spending on pricier big ticket items.
“While consumers (in developed markets) express growing frustration with rising prices for a broad range of goods and services, they continue to perceive chocolate and biscuits as affordable indulgences and an important pick-me-up,” the Oreo-maker’s chief executive Dirk Van de Put stated on an earnings call.
“Firms are making the difficult decision to choose between passing on the increase in expenses to their customers, making less profit or decreasing the quality or quantity of goods or services – known as skimpflation,” editor in chief of platform Finance.co.uk, Laura Rettie said.