Nestlé Forecasts Further Price Hikes for Staple Items in 2023 Consumers could face more pain at the supermarket checkout.
By Steve Huff
Nestlé has warned that the prices of staple items could increase in 2023 as the company struggles to deal with rising costs.
Prices rose by 8.2% in 2022, and the cost surge made it difficult for Nestlé to keep up. These increases also prompted many households to curtail their spending on popular Nestlé products like Nespresso pods and chocolate bars.
CNN quoted CEO Mark Schneider, who said in a media call that Nestlé is "still in a situation where we're repairing our gross margin and, like all the consumers around the world, we've been hit by inflation, and now we're trying to repair the damage that has been done." As the Financial Times notes, Unilever faced a similar problem in 2022, with consumers purchasing fewer products thanks to unprecedented price increases. As a result, Nestlé is trimming down less popular product lines — including entire brands — to combat these issues and focus on its most successful products.
Price hikes of raw materials, labor, and logistics have played a role in price increases. Unfortunately, these costs are unlikely to decline anytime soon. Consumer goods companies are challenged by the dichotomy between balancing rising prices too aggressively and driving shoppers away. While shoppers may be looking for cheaper options, some retailers capitalize on the trend by decreasing grocery bills. Walmart's brand — for example — has seen strong growth in Europe, and supermarket executives may increasingly turn to private-label products to combat rising costs.
Since it is the largest food group in the world, consumers worldwide will likely feel Nestlé's warnings of further price hikes. Moreover, the company's struggles to manage its rising costs underscore the challenges many consumer goods companies face in the current economic climate.
