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Nestlé hints at price rise to offset weak pound Nestlé hints at price rise to offset weak pound
(about 5 hours later)
Nestlé has hinted that it might follow Pot Noodle and Marmite maker Unilever by seeking to raise the price of some of its products, such as KitKat and Milkybar, to offset the weakness of the pound. Nestlé has hinted that it might follow Pot Noodle and Marmite-maker Unilever by seeking to raise the price of some of its products, such as KitKat and Milkybar, to offset the weakness of the pound.
Speaking as the Swiss firm released disappointing sales figures on Thursday, chief executive Paul Bulcke said the firm’s UK business would make its own decision on prices but admitted they could rise.Speaking as the Swiss firm released disappointing sales figures on Thursday, chief executive Paul Bulcke said the firm’s UK business would make its own decision on prices but admitted they could rise.
“They’re gonna have to sort it out and do that responsibly,” he said. “That means seeing all possible other actions to absorb the [devaluation].”“They’re gonna have to sort it out and do that responsibly,” he said. “That means seeing all possible other actions to absorb the [devaluation].”
But he added that price rises would be limited by the fact that most of Nestlé’s biggest-selling products in the UK are also made there.But he added that price rises would be limited by the fact that most of Nestlé’s biggest-selling products in the UK are also made there.
“I think KitKat is going to stay a very enjoyable great break, so I don’t see that turning differently,” he said.“I think KitKat is going to stay a very enjoyable great break, so I don’t see that turning differently,” he said.
The merest hint of price rises is likely to cause jitters among supermarkets, coming just a week after a spat between Marmite-maker Unilever and supermarket chain Tesco. The merest hint of price rises is likely to cause jitters among supermarkets, coming just a week after a spat between Marmite-maker Unilever and Tesco.
Several products briefly disappeared from Tesco’s website, sparking fears of a nationwide Marmite shortage, after the retailer balked at Unilever’s plans to raise prices by 10%. Several products briefly disappeared from Tesco’s website, sparking fears of a nationwide Marmite shortage, after the retailer balked at Unilever’s plans to raise prices by 10%. The two firms eventually reached an accord, although neither side disclosed whether this would mean an increase in the price of Unilever products.
The two firms eventually reached an accord, although neither side disclosed whether this would mean an increase in the price of Unilever products. The Nestlé boss’s comments will encourage fears that some of its best-loved products, such as Nescafé and KitKat, are also destined to rise in price.
The Nestlé boss’s comments will fuel fears that some of its best-loved products, such as Nescafe and KitKat, are also destined to rise in price.
Retail experts expect other companies to follow suit if sterling stays persistently low or falls even further against the dollar and euro.Retail experts expect other companies to follow suit if sterling stays persistently low or falls even further against the dollar and euro.
Veteran retail analyst Nick Bubb said supermarkets would have to get used to foreign food companies looking to offset reduced income from pounds spent by British shoppers.Veteran retail analyst Nick Bubb said supermarkets would have to get used to foreign food companies looking to offset reduced income from pounds spent by British shoppers.
“These things are inevitable, given sterling weakness and the supermarkets can’t expect suppliers to shoulder all the burden,” said Bubb.“These things are inevitable, given sterling weakness and the supermarkets can’t expect suppliers to shoulder all the burden,” said Bubb.
The British Retail Consortium has warned that the fall in the pound since the Brexit vote is likely to push up prices, because much of the UK’s food is imported from abroad.The British Retail Consortium has warned that the fall in the pound since the Brexit vote is likely to push up prices, because much of the UK’s food is imported from abroad.
Tesco’s UK boss Matt Davies said earlier this week that food price inflation could prove “lethal” for millions of people on low incomes. Tesco’s UK boss, Matt Davies, said earlier this week that food price inflation could prove “lethal” for millions of people on low incomes.
Nestlé’s warning of potential price rises came as the firm cut its forecast sales growth for the year after a slowdown Nestlé’s warning of potential price rises came as the firm cut its forecast sales growth for the year after a slowdown.
The world’s largest food company, which has a stock market value of £190bn, now expects sales to rise by 3.5%, down from an earlier prediction of 4.2%, after sales in the first nine months rose 3.3% to £58.5bn.The world’s largest food company, which has a stock market value of £190bn, now expects sales to rise by 3.5%, down from an earlier prediction of 4.2%, after sales in the first nine months rose 3.3% to £58.5bn.
“These figures reflect a global soft trading environment,” said Bulcke.“These figures reflect a global soft trading environment,” said Bulcke.
He said the company was happy to chase sales volume and market share, while resisting the urge to raise prices amid economic fragility around the world and the risk of deflation in areas such as Europe.He said the company was happy to chase sales volume and market share, while resisting the urge to raise prices amid economic fragility around the world and the risk of deflation in areas such as Europe.
But he said Nestlé was taking steps to become “leaner and more efficient”.But he said Nestlé was taking steps to become “leaner and more efficient”.
Europe, the Middle East and North Africa was Nestlé’s weakest region, displaying nine-month sales growth of just 2.2%, while North America performed the best, up 4.5%.Europe, the Middle East and North Africa was Nestlé’s weakest region, displaying nine-month sales growth of just 2.2%, while North America performed the best, up 4.5%.