June 28, 2022

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KitKat And Durex Makers Nestle And Reckitt Warn Of Price Rises

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KitKat and Nescafe-maker Nestle has warned it will increase the prices of its products due to the growing cost of producing its goods.

Mark Schneider, boss of the food group, said it was “safe assumption” that prices would rise this year.

He said there was “no place” in the company that was “exempt of inflation”.

Meanwhile, Reckitt, the consumer goods company behind Durex and Dettol, said it also would raise prices to offset higher running costs.

“We will apply appropriate pricing and net revenue growth management actions in 2022 to offset these pressures and will continue to deliver on our strong productivity programme,” said Reckitt chief executive Laxman Narasimhan.

Nestle said it had already lifted prices by 3.1% in the fourth quarter of its financial to offset rising operating costs.

“It is a safe assumption that our input cost increases for 2022 will be higher than 2021, that is something that we have to reflect in our pricing,” said Mr Schneider

“There is almost no place in the company that is exempt of inflation now,” he added. “Some of these things you can hedge against, some not.”

Consumer goods companies have previously warned of price rises for products due the rising costs of raw materials, energy and labour.

It will raise pressure on households who are facing a cost of living crisis.

Recent data showed that inflation hit a 30-year high of 5.5% in the year to January and the Bank of England forecasts that the cost of living could reach over 7% by spring – far above its 2% inflation target.

Gas and electricity costs are set to rise in April when the new, higher energy price cap is introduced. At the same time companies, their staff and the self-employed will pay 1.25p more in the pound for National Insurance.

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Rising sales

Nestle, which also makes Cheerios and Smarties, revealed total sales increased by 3.3% to SwFr87.1bn (£69.5bn) last year.

The firm’s net profit grew by 38.2% to SwFr16.9bn.

It said sales had been driven by strong demand for coffee, pet products and health foods during the pandemic.

“While some of that will lessen now with the pandemic coming to an end, some of it is also going to stay,” Mr Schneider said.

Meanwhile, Reckitt said its full-year sales had increased by 3.5%, ahead of expectations, on demand for hygiene and health products.

Sales of Durex condoms, KY lubricants and Veet hair removal products were boosted as lockdowns were lifted.

The firm added sales of US cleaning and disinfecting spray Lysol were about 90% higher than 2019.

It said it expected its health business to benefit from stronger cold and flu treatment sales.

Last week, Unilever, the firm behind brands such as Marmite and Dove Soap, said it would put up its prices again this year as its overheads continue to rise.

The consumer goods giant, which already raised prices in 2021, said the cost of some its goods would climb but it would vary from country to country.

The company, which also makes Ben & Jerry’s ice cream and Hellmann’s mayonnaise, said it was facing €3.5bn (£2.95bn) of extra costs in 2022 alone.

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