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Nestlé anticipates further price hikes for 2022

Nestlé’s chief financial officer François-Xavier Roger, said that he expects that “the input cost inflation will be higher next year than it is this year.” Current price hikes may be followed by continued upward pressure all the way until 2023, he said at the Barclays Global Staples Conference this week and reported on by Food Navigator.

Roger said that the company cannot hedge its bets and prepare consumers for the magnitude of the price hikes since it is not only rising raw material costs that are putting pressure on the Swiss food giant’s margins. Packaging and transportation costs are also rising under inflationary pressures that are the highest since 2011. Transportation, distribution and packaging are the main reasons that prices are increasing dramatically, according to an analysis by Jeffries.

At the conference, Roger confirmed that these higher costs will be passed down to the customer. “We will have a fairly pragmatic approach…which is to offset anything that we receive through pricing,” he said.

Worldwide, food prices have been increasing in recent months. In the U.S., the USDA Consumer Price Index reporting that food prices were 3.4% higher in July than the year prior. The cost of food In the E.U. increased 1.4% in July of 2021 from a year prior. These increases have become so pronounced that, a report from Mazars USA showed rising costs have become the top external concern among food and beverage industry executives.

Nestlé, however, remains unconcerned. At the conference, Roger said the company was “very confident” in its pricing power and that it is “in a really strong position to pass on pricing.”