Coffee and cocoa products have increased prices,

Source: Wall Street Insights

Thanks to the price increase of some product categories, Nestlé's organic sales in the first quarter (Q1) grew by 2.8% exceeding expectations, and it stated that the indirect impact of tariffs is "still unclear".

On Thursday, Nestlé, the world's largest food company, released its financial report showing that the company's organic sales in the first quarter achieved a year-on-year growth of 2.8%, slightly higher than the average analyst expectation of 2.6%. This growth was mainly driven by price increases. Against the backdrop of soaring costs of coffee and cocoa due to tariff shocks, the company had to raise the selling prices of products such as Nescafé coffee and KitKat chocolate bars.

In terms of profit guidance, Nestlé still maintained its full-year performance guidance. It is expected that the organic sales growth in 2025 will exceed that of last year (which dropped to the lowest level in decades at that time), and the key profit margin will reach or be higher than 16%.

Regarding the potential impact of tariff policies, Laurent Freixe, CEO of Nestlé, said in a statement:

"This is based on our assessment of the direct impact of current tariffs and our ability to adapt. At present, the indirect impact on consumers, customers, as well as currency and commodity prices is still unclear."

It is worth noting that the growth rate of the actual internal growth indicator reflecting sales volume is relatively slow, indicating that consumers may be hesitant about price increases. Nestlé said that currently, the "customer loss caused by the price increases of coffee and confectionery products is limited".

Looking at different regions, the North American market grew the slowest, but Nestlé also saw some positive signals in this region: sales volume resumed positive growth, regained market share in "multiple product categories", and the share loss in the categories of frozen foods and coffee creamers decreased.

The company promised to reduce the price of frozen pizzas to win back consumers who were lost in the fierce price competition.

The report shows that the company may cut costs in the future and focus on key products. It is reported that Freixe plans to increase advertising spending and focus on "fewer but more important product innovations".

In addition, the company had previously announced a cost-cutting plan of 2.5 billion Swiss francs (approximately 3 billion US dollars), aiming to free up resources to drive growth.

Disclaimer: The views expressed in this article only represent the personal views of the author and do not constitute investment advice on this platform. This platform makes no guarantees regarding the accuracy, completeness, originality, and timeliness of the article information, nor does it assume any liability for any losses incurred due to the use or reliance on the article information.