Nestlé CEO Confirms Rising Costs and Warns Food Sector
Nestlé’s chief executive, Navratil, said the company’s sales in the affected region had been largely insulated from the conflict. He said the more immediate effect was being felt through higher energy, transport and input costs across the food industry, regardless of where companies sell their products. “The primary effects will be felt in what we buy, in terms of input costs,” he said.
Nestlé’s response includes three measures: raising prices, pursuing what Navratil called “relentless” cost reductions, and changing product formulations. The company is also removing products for which consumers are “not willing to pay more”. Navratil did not identify the products involved.
The changes form part of a wider review of Nestlé’s portfolio. The company owns more than 2,000 brands, including Nescafé, Maggi and KitKat. It recently sold a stake in its bottled-water business and is withdrawing from vitamins. The moves are part of Navratil’s stated effort to narrow the company’s focus around its main brands.
Navratil said the strategy did not consist solely of selling assets. “This does not mean that Nestlé is simply disposing of assets. As always, we are open to acquiring companies that are strategically important,” he said. He provided no further details about potential acquisitions.
The executive also addressed proposed food-labelling rules in India. The proposal would place front-of-pack warnings about sugar, salt and fat. Navratil said food manufacturers should take an active part in discussions about the measure. The issue has received scrutiny after Reuters reported in August on documents indicating that companies had lobbied against such warnings.
According to Navratil, Nestlé has already removed thousands of tonnes of sugar, salt and fat from its products. He said labelling rules should accurately reflect serving sizes so that information given to consumers is not distorted. The measures discussed by the executive therefore cover product costs, the composition of Nestlé’s portfolio and the regulation of nutritional information.
