Supply chain · 21 October 2016

Nestl? hints at UK price rise to negate impact of weak pound

KitKat
Brands like KitKat could see price increases in UK supermarkets
The world’s largest food company Nestl? has admitted it may follow Marmite-maker Unilever by looking to increase the price of some of its popular products in the UK to offset the weak pound.

Nestl, which produces household brands like KitKat, Nescaf? coffee and Haagen-Dazs ice cream, warned of a price following disappointing 2016 sales figures.

Speaking at a press conference after the release of Nestl s latest sales figures, the Swiss firm’s chief executive Paul Bulcke said that Nestl s UK arm would make its own decisions, but that future price increases were likely.

Bulcke said: They [the UK] are going to have to sort it out and do that responsibly. That means seeing all possible other actions to absorb the [devaluation].

However, Bulcke added that a UK price hike may be limited by the fact many top selling Nestl? products are produced in Britain.

I think KitKat is going to stay a very enjoyable great break, so I don’t see that turning differently, he added.

Any suggestion of a rise in prices will likely spook supermarkets, as the announcement comes only a week after food supplier Unilever’s dispute with Tesco over a proposed 10 per cent price increase on certain popular items.

Several products, including Marmite and Ben & Jerry’s, briefly disappeared from Tesco’s online store. Unilever and Tesco eventually reached an agreement, although neither firm revealed whether their resolution will would result in Unilever products becoming more expensive.

The British Retail Consortium (BRC) has repeatedly warned that the fall in the pound’s value against the euro and the dollar since the Brexit vote is likely to push prices up, considering much of the nation’s food is imported from overseas.


 
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Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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