Bloomberg – Nestlé USA is increasing the prices of some chocolate products Due to the costs of raw materialsa sign that sweets will remain expensive for consumers in the short term.
The American Division of Nestlé SA, the world’s largest food company, will raise the prices of its snacks Toll Housecocoa for baking and Dulce de Milk Kits As of June 23, according to a memorandum consulted by Bloomberg News.
The increases occur after the letters sent by the company at the end of last year to some of its suppliers of raw materials in which Nestlé asked them to prices would reduce, offer sales And, in some cases, even They will completely cancel supply contractsaccording to people familiar with the matter they asked not to be identified because the information is private. Some suppliers refused to do so, according to these people.
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The cards were specific to each supplier and detailed what the company wanted for a series of products it buys, including sugar and coffee, people said.
Chocolate prices and some food products continue to rise even when the general inflation of the groceries is moderated. The shortage of supply raised cocoa futures to a record at the end of last yearwhich caused price increases that are testing the appetite of consumers to pay more for snacks.
Nestlé and his rivals have faced an increase in cocoa and coffee costs during the past year, which has caused price increases to protect margins. These increases were the main engine of Nestlé sales growth in the first quarter, better than expected. The CEO, Laurent Freixehe said that the Swiss group is applying “all the prices we can to cover our costs, while We are aware of consumer response in a competitive environment”.
Nestlé will communicate the specific price changes of the products at a later date, according to the note. Pricing changes for consumers will be decided by retailers, which will evaluate a series of factors, including competition.
Toll House’s price increases occur after “exhausting efforts to compensate for aggravations due to the increase in basic products costs,” according to Nestlé’s note. The changes are not due to recent tariffs, the company said in the note.
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Nestlé intends to save 700 million Swiss francs (US $ 843.6 million) in costs in 2025, mainly through purchases.
A Nestlé spokesman said There has been a significant increase in cocoa costs in the last two years and that the company is applying price increases after careful consideration of the macroeconomic environment and efforts to navigate the highest prices. At the moment no other cocoa products will be affected.
Cocoa futures in New York fired last year until reaching a record close to US $ 13,000 a ton, When bad weather and disease affected Western Africa crops. Although prices have now dropped about 30% from the maximum for the expectations of a small surplus, cocoa remains much more expensive than historical levels.
Arabica coffee futures also reached a record at the beginning of the year, since dry weather harmed the production of the main producer, Brazil.
Economists, investors and companies closely monitor prices after years of high inflation that have reduced the purchasing power of some consumers. The expansive and changing tariffs of US President Donald Trump are expected to increase the prices of some goods. The trust of American consumers fell in April to their lowest level in almost five years due to the growing pessimism about the economy and the labor market.
Nestlé has been fighting in North America, which was one of the regions with worse results of the company in the first quarter. It was also One of the few areas where average prices lowered. The Swiss food company lost market share as consumers, suspicious of inflation, opted for cheaper alternatives, something that the general director Freixe has pledged to alleviate cutting the prices of products such as frozen pizzas in the US.
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Sweets, coffee and eggs are some of the items that are overcoming the general inflation of the grocers, of a single digit, according to data from the US government. The unitary average prices of American chocolates have risen about 18%, to US $ 3.45, in the four weeks that ended April 19, compared to two years before, according to the NIQ research company.
The increase in chocolate prices has reduced the volume of some food companies, since consumers are still aware of costs. Hershey Co. (Hsy) said earlier this month that the prices of daily use chocolates have risen 8% so far this yearwhile the volume has dropped 4.5%. Meanwhile, Mondelez International Inc. (MDLZ) He recently said that he is reconfiguring his chocolate business to offer a range of packaging sizes while maintaining low prices for certain key products.
With the help of Ileena Peng.
Read more at Bloomberg.com
