LONDON (Reuters) -Nestle posted lower-than-expected nine-month sales growth on Thursday as higher product prices made shoppers balk and hurt volumes.
The packaged goods industry has for over two years hit shoppers with higher prices, citing higher input costs that started with the COVID-19 pandemic and were exacerbated by Russia’s invasion of Ukraine. Everything from sunflower oil to freight has become more expensive, taking a toll on global supply chains.
Nestle’s 8.4% price increase was below the average analyst estimate of 8.6%. Real internal growth – or a measure of sales volumes – fell 0.6%, meeting expectations.
Investors and analysts have raised concerns that companies are pushing price rises too far and recommended that they focus more on marketing and innovation, amid a cost of living crisis that is seeing retailers’ private label brands stealing market share.
Organic sales, which exclude the impact of currency movement and acquisitions, rose 7.8% in the nine months ended September, the maker of Maggi stock cubes and Nescafe coffee said.
Analysts had on average expected organic sales growth of 8.1%.
Total reported sales decreased by 0.4% to 68.8 billion Swiss francs ($76.54 billion).
Executives have in recent quarters flagged that costs are rising at a slower pace, but also warned that shoppers would continue to pay more for products like soap, toilet paper and coffee because companies still have not recouped years of damage from higher expenses.
($1 = 0.8989 Swiss francs)
(Reporting by Richa Naidu; Editing by Christopher Cushing)
