Nestlé raised prices by 6.5% in the first half of 2022 as it grapples with an “unprecedented” rise in costs.
The world’s largest food company raised prices the most in North America – a 9.8% increase – followed by Latin America at 9.4%, Nestle said in a statement on Thursday.
Rising raw material, packaging, freight and energy costs weighed on the company’s operating profit margin, Nestle (NSRGF) said.
“We have limited the impact of unprecedented inflationary pressures and supply chain constraints on the development of our margins through disciplined cost control and operational efficiency,” CEO Mark Schneider said in a statement. .
Despite higher prices, the company, which counts KitKat and Nescafé among its brands, increased its organic sales by 8.1% over the period — driven by strong demand for its Purina pet food products.
Soaring global inflation drove up costs for the world’s largest manufacturers, which then passed them on to consumers. Unilever (UL), one of Nestlé’s competitors, said on Tuesday it had raised its prices by an average of 9.8% over the first six months of the year.
Rising prices have also fueled global food insecurity, aggravated by Russia’s invasion of Ukraine in February. The war has pushed the cost of energy and basic commodities to record highs, crushing poorer countries that depend on imports.
There is good news: world food prices have fallen for three consecutive months, according to the Food and Agriculture Organization of the United Nations’ food price index, although they have further increased by 23% in June compared to the previous year.
The World Food Program (WFP) estimates that 47 million people have entered a phase of acute hunger as a result of the war in Ukraine.
Last week, Russia and Ukraine signed an agreement that would allow grain and oilseed exports from Ukraine’s Black Sea ports to restart after months of lockdown.
— Julia Horowitz, Rob Picheta, Jomana Karadsheh, Radina Gigova and Tim Lister contributed reporting.