Nestlé increased its prices by 7.5 per cent in the first nine months of the year, the biggest amount in decades, enabling the world’s largest foodmaker to raise its forecasts for the year.
The maker of Maggi noodles, Kit Kats and Nespresso capsules said it expected full-year sales growth of 8 per cent, the higher end of the range it had previously signalled.
Like-for-like net sales growth reached 8.5 per cent in the first nine months, its highest rate in 14 years. Real internal growth — a measure of sales volumes and the types of products consumers choose — was 1 per cent. Total sales for the period were SFr69.1m ($69.3bn).
The price increases were the largest in “several decades” for the Swiss group, said Bernstein analyst Bruno Monteyne.
Sales growth was propelled by pet food, with households buying Nestlé’s Purina brands for their dogs and cats despite the squeeze on their budgets from inflation.
Increases in sales volumes, however, stalled in the third quarter — analysts estimated real internal growth had fallen 0.2 per cent during the quarter. Sales of Nespresso capsules declined as people drank less coffee at home with the lifting of coronavirus restrictions.
“If, as we expect, there is a consumer recession to come, Nestlé is coping admirably,” said James Edwardes Jones, analyst at RBC Capital Markets.
But he noted that sales of water, prepared foods and confectionery had also slowed in the third quarter. “Even Nestlé, it could be argued, is starting to show early signs of tougher conditions,” he said.
Shares in Nestlé were flat in morning trading on Wednesday.
The group also announced it would buy the Seattle’s Best Coffee brand in the US from Starbucks for an undisclosed price.
Mark Schneider, chief executive, said Nestlé had “delivered strong organic growth as we continued to adjust prices responsibly to reflect inflation”.
He added: “Our real internal growth remained resilient despite a high base of comparison and continued supply chain constraints.”