Food Prices Will Rise This Year Says Nestle

As the global economy recovers from the pandemic, the cost of staple items is set to rise further in 2023. Nestlé, the world’s largest food group, has joined other consumer giants like Unilever, Coca-Cola, Heineken, Colgate-Palmolive, and Procter & Gamble in warning consumers of more pain to come for stretched households.

Nestle Prices

Nestlé increased prices by 8.2% in 2022, but its profits were still dented by the rise in its own costs. CEO Mark Schneider said that the price increases would be “very targeted” and implemented only where “input cost inflation justifies that,” but he declined to name which of the company’s 2,000 brands would be affected.

Unilever Prices

Unilever has also seen significant price increases in 2022, with a 13.3% hike in the final three months of the year. The company’s CEO Alan Jope has warned that food, including ice cream, will see further price increases in 2023.

All Costs Risen For Raw Material And Labor

The costs of raw materials such as energy, dairy products, and grains remain high, even though they have receded from their peaks. Labor and logistics costs have also climbed. This means that prices for goods in stores are unlikely to fall any time soon.

Consumer goods companies like Nestlé and Unilever have a delicate balance to strike, as increasing costs squeeze their profit margins, and raising prices too aggressively risks driving shoppers away. Unilever reported a decline in sales volumes of 2.1% in 2022 due to price increases.

Retailer Dilemma

As shoppers try to keep grocery bills down, retailers’ own brands may be the winners. Walmart has seen strong growth in its private label sales, and that trend is extending to retailers in Europe. Unilever has also seen share gains by private label in Europe in most categories.

As a result of disputes over pricing in the past year, some branded products have been removed from shelves for short periods. During price negotiations last summer, Kraft Heinz stopped supplying some products to the biggest UK grocery retailer Tesco. Once the products were restored, prices were unchanged on Heinz’s most popular lines.

In the coming year, consumers will have to find ways to stretch their budgets while companies balance profitability and consumer demand in a recovering economy.