NESTLE reported today a drop in sales volume as the Swiss food giant hiked prices in the face of inflation, but the group still confirmed its outlook for the year.  

The company – whose brands range from Nespresso capsules to Purina pet food to Gerber baby products – said sales fell 0.6% in terms of volume in the January to September period from a year earlier.  

Revenue reached CHF68.8 billion (RM366 billion) – 0.4 % lower than the same period last year due to the strength of the Swiss currency.  

Its organic sales growth – which excludes currency fluctuations and acquisitions – rose 7.8% as the company raised prices, but it was below expectations.  

“Growth was driven by pricing as we continued to navigate historic inflation levels,” Nestle chief executive Mark Schneider said in an earnings statement.  

The recovery of sales volume was “underway”, he added.  

The company confirmed its outlook for 2023, with organic sales growth between 7% and 8%.  

Consumer goods companies have raised prices across the world as inflation has remained elevated despite interest rate hikes by central banks.  

Nestle has slowed its prices increases as they reached 8.4% over the nine-month period after rising by 9.5% in the first six months of the year.  

“There comes a time when shoppers will start to say enough is enough when it comes to price rises and Nestle has woken up to that realisation,” said Susannah Streeter, analyst at UK investment service firm Hargreaves Lansdown.  

“The cost-of-living crisis has been swirling for two years, and now with consumer budgets increasingly battered, it’s understandable more shoppers are switching to cheaper products,” Streeter added.  

Nestles will remain resilient, however, thanks to its diverse range of products, she said.  

Andreas von Arx, analyst at brokerage firm Baader Helvea, said Nestle’s latest earnings “reflect the challenging environment and uncertainty on the consumer outlook”.  

“On the positive note, we also do not see any major new negative surprises,” he said, adding that he expects volume growth to “clearly improve” in the fourth quarter.  

Nestle shares fell more than 2.3% in early afternoon trading on the Swiss stock exchange. – AFP, October 19, 2023.