Nestlé, one of the world’s largest food and beverage companies, has shocked Wall Street by revealing a big drop in its sales this year.
The maker of Nespresso and Nestlé coffee, Purina and Felix pet foods, Lean Cuisine and Stouffers ready meals, San Pellegrino water and DiGiorno pizza said sales fell 2.4 percent in the nine months to the end of September.
At a company of this scale, such a decline is equivalent to tens of millions of jars of coffee, bags of pet food and pizzas that Americans have left on shelves and in freezers.
And the bosses have admitted that they themselves are to blame: for raising prices too much in the last two years and driving buyers to cheaper rivals.
“The perception of consumers everywhere, but especially in the United States, is that food prices are high,” The CEO of Nestlé, Laurent Freixe, stated in an interview with the Wall Street Journal.
Nestlé’s portfolio includes well-known brands such as Nescafé coffee.
In the interview with the wall street newspaperFreixe said the company would now reduce prices and offer discounts to attract customers.
“We have come out of a period of high inflation,” he added. “The atmosphere is more intense now.”
Inflation has now fallen to 2.4 percent. from a year ago in September.
This should ease pressure on price increases and leave room for companies to make concessions to consumers.
Nestle said it has already seen prices drop by one percent on its U.S. products in recent months.
Similarly, rival Pepsi, which makes soft drinks and snacks under brands such as Lay’s, has said its own price increases and smaller pack sizes have led to a drop in sales.
“Nestlé’s weak sales results underline the extent to which consumers are still reacting to higher prices,” retail expert Neil Saunders of Global Data told DailyMail.com.
‘Over the last two years, inflation has been tremendous and, as a result, people have changed their purchasing habits.
Nestlé is a leader in pet foods under the Purina brand, which has seen price increases.
Nestlé makes KitKat cereal, although the chocolate bars of the same name are made by rival Hershey’s under a long-standing licensing agreement. Cereal boxes have been affected by price increases
‘In supermarkets they are switching to cheaper brands, switching to own brands and they are cutting back on the amount they buy.
“That affects Nestlé and also limits the extent to which it can increase prices in the future.”
The Swiss firm sells KitKat chocolate bars worldwide, but in the United States it only manufactures breakfast cereals under that name. In fact, Hershey’s sells KitKat bars in the United States.
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