# Nestle sales soar as price rises drive growth
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-19
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Nestle's Strongest Sales Growth in 14 Years
Meta Description: Nestle raises full-year guidance as organic sales increase by 8.5%, driven by higher prices aimed at offsetting rising costs. CEO Mark Schneider voices
URL: https://financedigest.com/nestle-sales-soar-as-price-rises-drive-growthhtml

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By John Revill and Richa Naidu

ZURICH/LONDON (Reuters) -Nestle posted its strongest nine-month sales growth in 14 years on Wednesday and raised its full-year guidance as the world’s largest packaged food company lifted prices without losing many customers.

The maker of KitKat chocolate bars and Nescafe reported organic sales, which cut out the impact of currency movements and acquisitions, rising by 8.5% in the nine months to end-September. It was the highest nine-month rise since 2008 and was driven by [higher prices aimed](https://www.financedigest.com/maserati-aims-at-driving-margins-higher-before-any-spin-off-talk.html "Maserati aims at driving margins higher before any spin-off talk") at offsetting rising costs.

We delivered strong organic [growth as we continued](https://www.financedigest.com/brand-metrics-continues-on-steep-growth-trajectory-with-appointment-of-vp-business-development-in-the-us.html "Brand Metrics continues on steep growth trajectory with appointment of VP Business Development in the US") to adjust prices responsibly to reflect inflation,” the company’s chief executive Mark Schneider said.

[Shares in Nestle were up 0.2% in mid-morning trade](https://www.financedigest.com/social-trading-is-the-new-way-that-gen-z-are-getting-their-share-of-the-pie.html "Social Trading is The New Way That Gen Z Are Getting Their Share of The Pie").

Despite the [strong sales](https://www.financedigest.com/indias-tata-motors-jumps-to-a-7-month-high-on-strong-q4-jlr-sales.html "India’s Tata Motors jumps to a 7-month high on strong Q4 JLR sales"), some analysts worried price rises could soon push consumers too far, potentially pricing some of its products out of their reach amid a cost of living crisis that is seeing sales volumes across the industry decline.

Britain’s consumer price index (CPI) increased by 10.1% in September versus last year, the Office of National Statistics said on Wednesday, reporting the [biggest jump in food prices since](https://www.financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gaps.html "UK firms plan biggest pay rises since 2012 to fill staff gaps") 1980 and matching a 40-year high hit in July. [Euro zone inflation](https://www.financedigest.com/euro-zone-inflation-eases-in-feb-but-core-prices-pick-up.html "Euro zone inflation eases in Feb but core prices pick up") also zoomed past forecasts in September to hit 10%.

You do worry about the [pricing power category by category particularly for discretionary food](https://www.financedigest.com/france-leans-on-retailers-to-help-consumers-cope-with-food-prices.html "France leans on retailers to help consumers cope with food prices") – nobody really needs a KitKat or an ice cream,” said Chris Beckett, head of equity research at Quilter Cheviot.

Sales volumes have held up well so far but we are a [way from peak cost of living](https://www.financedigest.com/redefining-renting-tipi-launches-the-best-way-to-live-in-london.html "REDEFINING RENTING: TIPI LAUNCHES ‘THE BEST WAY TO LIVE IN LONDON’") squeeze.

Nestle CEO Mark Schneider [raised concerns about the “challenging”](https://www.financedigest.com/deutsche-post-raises-annual-dividend-warns-of-challenging-2023.html "Deutsche Post raises annual dividend; warns of challenging 2023") economic environment, which he said was hurting the purchasing power of many customers.

Euro zone inflation hit 10% in September, while [prices increased](https://www.financedigest.com/syngenta-4q-profit-falls-as-raw-material-prices-increase.html "Syngenta 4Q profit falls as raw material prices increase") by 8.2% in the United States, stretching the pockets of consumers already spending more on fuel bills and mortgage payments.

“DECENT” RESULT

Analyst Jon Cox of Kepler Cheuvreux said growing organic sales was a “decent” [result for the company given the continued price](https://www.financedigest.com/immediate-lift-of-oxford-property-prices-to-result-from-new-direct-high-speed-rail-connection-with-london.html "“Immediate lift” of Oxford property prices to result from new direct high speed rail connection with London") increases even if third-quarter volumes dipped.

For the nine months to end-September, Nestle [posted sales](https://www.financedigest.com/mercedes-posts-rise-in-q1-sales-boosted-by-evs-premium-cars.html "Mercedes posts rise in Q1 sales boosted by EVs, premium cars") of 69.1 billion Swiss francs ($69.4 billion), beating the 68.9 billion francs forecast in a company-gathered consensus of 23 analysts.

Most of the organic growth [increase came from higher pricing](https://www.financedigest.com/coca-cola-hbcs-annual-profit-beats-warns-of-price-increases.html "Coca-Cola HBC’s annual profit beats, warns of price increases"), accounting for 7.5 percentage points of the 8.5% increase, while volumes increased by 1 percentage point over the period.

As a result Nestle [raised its full-year outlook](https://www.financedigest.com/tomtom-raises-2023-revenue-outlook-as-automotive-drives-q4-beat.html "TomTom raises 2023 revenue outlook as automotive drives Q4 beat"), saying it now expected organic growth of “around 8%” for 2022, up from a 7% to 8% increase previously.

The Swiss company also confirmed its target for a trading operating [profit margin](https://www.financedigest.com/inflation-boosts-jeronimo-martins-q4-profit-but-dents-margins.html "Inflation boosts Jeronimo Martins’ Q4 profit but dents margins") of around 17%.

Nestle also announced on Wednesday a deal to [buy the Seattle’s Best Coffee business](https://www.financedigest.com/ladbrokes-owner-entain-buys-sports-media-business-365scores.html "Ladbrokes owner Entain buys sports media business 365scores") from Starbucks.

($1 = 0.9953 [Swiss francs)](https://www.financedigest.com/swiss-franc-grapples-with-safe-haven-identity-crisis-after-credit-suisse.html "Swiss franc grapples with safe-haven identity crisis after Credit Suisse")

(Reporting by John Revill; Editing by Miranda Murray, Josephine Mason, Matt Scuffham and Jan Harvey)


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