5 months ago • 2 mins
What’s going on here?
Nestlé, the food titan, just served up some killer first-half results, and price hikes played a starring role.
What does this mean?
Consumer staples usually enjoy the privilege of upping their prices without causing a customer stampede – but with budget-conscious customers cutting back, even stalwarts like Unilever and PepsiCo are witnessing dipping sales volumes. And Nestlé’s in the same boat: after all, the amount of goods it sold took a hit for the fourth straight quarter. But that’s not the whole story. A hefty price rise of 9.5% meant the firm still managed to race past some expectations, with an impressive 8.7% increase in first-half organic sales. And the firm’s expecting to sell more products and make more money over the rest of the year – with a lush marketing drive designed to win back market share from white-label rivals.
Why should I care?
For you personally: I scream, you scream.
The chatter about staples matters, because your shopping basket is probably full of them. Right now, shoppers have to fork out 31% more for a jar of love-it-or-hate-it Marmite than they did last year – and 55% more for a four-pack of Magnum ice creams. So with inflation past its peak and some input costs on the decline, some staple-making firms are now facing accusations of price-gouging. But they’re not sitting idle: Nestlé plans to ease up on price rises for the rest of the year, and it looks like Unilever is following suit – which could give your bank balance some much-needed TLC.
Zooming out: Europe’s scorching.
Cooling price rises are exactly what European consumers need. The European Central Bank (ECB) just brought interest rates to a record high, with a 0.25-percentage-point hike on Thursday. And with the ECB warning that inflation is expected “to remain too high for too long”, it doesn’t seem like an end to hikes is in sight yet.
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