Nestle | Nestle raises concerns over ‘unprecedented’ headwinds for commodity prices, expects milk prices to rise

Nestle, the world's largest packaged food company, faces significant challenges in commodity prices, particularly in coffee and cocoa, which are at all-time highs with an ongoing price rally.

Published by: Damián Morais

Nestle, the world’s largest packaged food company, faces significant challenges in commodity prices, particularly in coffee and cocoa, which are at all-time highs with an ongoing price rally. Additionally, milk prices are expected to rise due to harsh summer conditions, while cereals and grains are experiencing structural cost increases supported by minimum support prices (MSP).

Nestle, the world’s biggest packaged food company on Thursday said that commodity prices are seeing unprecedented headwinds in Coffee and Cocoa with all-time high prices and an ongoing price rally. The maker of Maggi noodles, Nescafe coffee and KitKat chocolate wafer bars said that milk prices are expected to rise on account of the expected harsh summer.

Cereals and grains are going through a structural cost increase backed by MSP, the FMCG major said.

Nestle India has announced plans to form a joint venture company with Dr. Reddy’s, with the latter holding a majority stake of 51 per cent and Nestlé India holding the remaining 49 per cent.

The joint venture is expected to become operational in the second quarter of the financial year 2024-25.

Nestle India will have a call option to increase shareholding upto 60% after six years at a Fair Market Value. Dr Reddy’s shall continue to hold at least 40% of the shareholding after the Company exercises its call option.

Nespresso launch: Additionally, Nestle is set to launch Nespresso in India by the end of 2024. After the approved launch of Nespresso in India, the company is set to bring its products (machines and capsules) by the end of 2024.

Nestle India reported a bigger-than-expected increase in its quarterly profit on Thursday, as it benefited from higher product prices and demand for its packaged food items.

The Indian arm of the Swiss food giant Nestle reported a net profit of 9.34 billion rupees ($112.03 million)for the three months ended March 31, compared with 7.37 billion rupees a year earlier.

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