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Nestle and Danone signal slower price rises ahead

Published 22/02/2024, 12:51
Updated 22/02/2024, 12:51
© Reuters.  Nestle and Danone signal slower price rises ahead

Proactive Investors - Nestle S.A. (LON:0QR4) and Danone have both signalled food prices could climb more slowly over the coming year after such sharp increases have hit demand at both.

Nestle reported organic sales growth of 7.2% for the year to December, below analysts’ expectations for 7.4%.

Danone (LON:0KFX) said like-for-like sales had climbed by 7% meanwhile, with price increases offsetting a 0.4% decline in volumes.

Such price rises have become commonplace in shops in recent years, with the two packaged food giants among companies to have hit consumers with hikes on the back of soaring costs from the pandemic and war in Ukraine.

However, given hikes have led to a jump in shoppers searching around for cheaper alternatives, both companies joined rival Unilever PLC (LON:ULVR) in signalling a shift in focus of volumes.

"Pricing will be a lot lower this year than last year," Nestle chief executive Mark Schneider said on Thursday after the KitKat and Nespresso owner’s results.

"Growth going forward [...] is going to be a lot more volume and mix-based," he added, suggesting this should be “pretty universal”.

This comes after Unilever, another consumer goods giant, pointed towards easing price rises on the back of subsiding inflation in its own results earlier this month.

Danone boss Antoine de Saint-Affrique also acknowledged easing inflationary pressure, but warned price hikes were by no means set to go away.

"We are in a world of slowing-down inflation,” he said, warning that there could still be future “volatility”.

He added: “We expect to have a price component in our growth, it will differ by regions.”

Read more on Proactive Investors UK

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