While several FMCG giants announced price hikes this year – including Nestle, Coca-Cola, Colgate, P&G, and Unilever – Kraft Heinz says it doesn’t plan to make any.
During the past two years, FMCG producers increased prices to compensate for surging costs for nearly all raw materials after Russia’s invasion of Ukraine accumulated pandemic-related supply chain bottlenecks.
After lifting prices last year to offset “inflationary pressures”, Kraft Heinz reported a fourth-quarter profit and said it expects consumers to help push back against higher prices despite continuing rising costs.
Fourth-quarter sales of the ketchup maker jumped 10 per cent to US$7.38 billion from the previous year, reporting $887 million in net income or 72 cents in earnings per share.
“As we look to the rest of the year, we have no plan to announce new pricing in North America, Europe, Latin America and most of Asia,” said Miguel Patricio, CEO at Kraft Heinz.
Meanwhile, according to Reuters, Nestle plans to hike its prices again this year as CEO Mark Schneider said costly ingredients made the company miss its profit forecasts last year.
“Our gross margin is down about 260 basis points – that is massive,” said Schneider.
Last year, the company raised prices by 8.2 per cent but couldn’t fully offset the impact of increased costs for ingredients on margin.
Schneider explained that in most cases, the impact on volumes did not signal consumers trading down to cheaper private-label products.
Nestle’s net profit dropped to nearly $10 billion, missing its targets of $12.7 billion, although the forecast did not account for the impairment at Nestle’s Aimmune subsidiary last year.
“Nestle rarely misses, and that was a miss,” said Bernstein analyst Bruno Monteyne.
