CACAPAVA, Brazil/LONDON — Nestlé is raising prices, reformulating products and cutting items consumers are unwilling to pay more for as it tackles the effects of higher energy, freight and raw material costs following the conflict in the Middle East, CEO Philipp Navratil told Reuters.
While sales of the world’s biggest packaged-food maker have not been greatly impacted by the six-month-old Iran war, Navratil said the conflict was contributing to inflationary pressures faced by suppliers.
“Each and every supplier of ours will have some increase in costs,” Navratil told Reuters in an interview on Wednesday. “Some of them will come to us, and we will have to mitigate them [the costs], making sure consumers come along if we have to increase prices.”
The comments underscore how the war’s disruption of energy and commodity markets is filtering through global supply chains to the food aisle, even for companies with minimal direct exposure to the region.
In addition to raising prices, Nestlé is reformulating products, “relentlessly” pursuing efficiency savings and eliminating products consumers “are not ready to pay for,” Navratil said, without elaborating.
The Middle East accounts for about 2 percent to 3 percent of the Swiss company’s roughly 90 billion Swiss francs ($111 billion) in total sales, meaning the direct impact on sales has been limited.
“But you will have primary effects in terms of inflation in what we buy, in terms of input costs,” he said.
Procter & Gamble faces similar pressures
US consumer goods firm Procter & Gamble, which had already estimated a $1-billion after-tax profit hit in fiscal 2027, said on Thursday that oil prices above $100 a barrel, Canada’s retaliatory tariffs on the United States and a US driver shortage were all making the situation harder to manage.
“We all wake up every morning and something else happened,” Procter & Gamble’s chief financial officer, Andre Schulten, told a Barclays conference in Boston. The pressure on pricing would increase the longer oil stays above $100 a barrel, he added.
Schulten said the challenges remain manageable. “It makes it harder, but I’m still confident that we are in the right range.”
