Nestlé raises prices by 6.5% in first six months of the year

theguardian.com:

The maker of KitKat, Nespresso, Häagen-Dazs ice-cream and Maggi stock cubes has blamed “significant and unprecedented cost inflation” for a 6.5% rise in prices in the first half of this year.

Nestlé’s sales rose ahead of expectations driven by the price increases, analysts said, increasing 9.2% to 45.6bn Swiss francs (£39bn) in the half year, although net profit decreased by 11.7% to 5.2bn francs.

The food and beverage group said prices had risen most in its pet care brands, which include Felix, Purina and Friskies, where it pushed through inflation of 8.8%, followed by water, which was up 8.4%.

Geographically, inflation was highest in North America – where the group put prices up almost 10%, nearly double the rate in Europe. The company said profit margins had taken a hit in Europe as “significant cost inflation more than offset pricing, growth leverage and disciplined cost control”.

Nestlé said it now expected to increase sales by 8% this year, up from the 5% anticipated, but profit margins were set to be at the lower end of expectations, at 17%.

Mark Schneider, the chief executive of Nestlé, said: “Our local teams implemented price increases in a responsible manner. Volume and product mix were resilient, based on our strong brands, differentiated offerings and leading market positions. We limited the impact of unprecedented inflationary pressures and supply chain constraints on our margin development through disciplined cost control and operational efficiencies.”

He added that the group had increased investments in sustainability and digitisation of its processes significantly on last year.

Nestlé is the latest in a line of companies to put up the price of well-known brands in the face of higher energy, staffing and