Nestlé has maintained walking prices this year | CNN

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CNN Business

Nestlé raised its prices by 6.5% in the first half of 2022 as it struggles with an “unprecedented” rise in costs.

The world’s largest food company raised its prices the most in North America — up 9.8% — followed by Latin America at 9.4%, Nestlé said in a statement on Thursday.

Rising costs for raw materials, packaging, freight and energy weighed on the company’s operating profit margin, Nestlé (NSRGF) said.

“We have mitigated the impact of unprecedented inflationary pressures and supply chain constraints on our margin performance through disciplined cost control and operational efficiency,” CEO Mark Schneider said in a statement.

Despite higher prices, the company, which includes KitKat and Nescafe among its brands, grew its organic sales by 8.1% over the period — driven by strong demand for its Purina pet products.

Rising global inflation has pushed up costs for the world’s largest manufacturers, who have then passed them on to consumers. Unilever (UL), one of Nestlé’s competitors, said Tuesday it has increased its prices by an average of 9.8% in the first six months of the year.

Higher prices have also fueled global food insecurity, exacerbated by Russia’s invasion of Ukraine in February. The war has pushed the cost of energy and basic goods to record highs, putting pressure on poorer countries dependent on imports.

There is good news: according to the Food and Agriculture Organization’s food price index, food prices have fallen for three months in a row, although they were still 23% higher in June than a year earlier.

The World Food Program (WFP) estimates that 47 million people have entered a stage of acute hunger as a result of the war in Ukraine.

Last week, Russia and Ukraine signed an agreement allowing the restart of grain and oilseed exports from Ukraine’s Black Sea ports after months of blockades.

Julia Horowitz, Rob Picheta, Jomana Karadsheh, Radina Gigova and Tim Lister contributed coverage.



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