Nestle Sells Less Because Consumers Avoid Expensive Products

The Swiss food group Nestle, known for Nescafe coffee, Maggi sauces and KitKat chocolate bars, sold fewer products in the fourth quarter. Consumers more often opted for alternatives to the more expensive branded products of Unilever’s counterpart due to the price increases.

The drop in sales indicates that the largest food company in the world is reaching the limit of its price increases.

The volume, or sales expressed in product quantities, fell by 2.6 percent in the last quarter of 2022. The sales volume also decreased in the third quarter. Especially in the United States, the company sold fewer products previous quarter. There the volume fell by 4.9 percent.

Consumer goods manufacturers face the challenge of passing on higher costs in prices without driving away shoppers. Although Nestlé’s sales volumes only started to fall in the second half of 2022, rival Unilever saw volumes decline throughout the year. The last time Nestlé saw volumes drop was in 1999.

The Swiss company increased prices by 10 percent in the fourth quarter. As a result, total turnover grew by over 8 percent throughout 2022 to 95.5 billion euros. However, the profit margin decreased to 17.1 percent because the company could not pass on all cost increases to consumers. As a result, net profit plummeted by 45 percent to 9.4 billion euros, but that was because a book profit on the sale of an interest in cosmetics group L’Oréal propelled profits in 2021.

The company did not comment on further price increases in 2023. However, the company is aiming for a turnover growth of between 6 and 8 percent this year. The profit margin will have to be between 17 and 17.5 percent.

Leave a Reply

Next Post

TikTok Wants to Gain Trust With European Data Centers

Fri Feb 17 , 2023
After the first European data centre, TikTok will use two other data centres on European soil—in an attempt to address the EU’s data concerns. The Chinese TikTok is extremely popular in Europe, with more than 150 million monthly users. But it concerns a Chinese company where it is not always […]
US Wants Chinese Parent Company to Sell TikTok

You May Like

Quick Links