Nestle pointed out that there have been recent signs of consumers switching to cheaper home-branded products, so it has put on hold its plans to increase the price of its coffee products. Not all additional production costs were passed on to consumers.
This shows that the company is facing rising production costs, but is unable to pass them on to consumers. This is to avoid putting premature upward pressure on consumers.
Nestle Expects Continued Growth In Export Sales
Nestle’s export sales for the first 9 months of this year fell 8% y/y, but management believes that this is only a short-term phenomenon and expects more growth opportunities for export sales in the future. Nestle is likely to conduct more promotions to maintain sales growth momentum and capitalize on higher retail traffic during year-end sales and school holidays to drive brand awareness and sales growth.
On the other hand, analysts believe that Nestle will not be affected by the increase in sugar tax announced in Budget 2024 as all its products have been reformulated and are below the sugar tax threshold.