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The company has raised coffee prices with the quantum of hike being around 12%, analysts said. The company did not confirm this. Nestle India continues to take steep price hike even as its
volumes are endangered. The company has raised coffee prices with the quantum of hike being around 12%, analysts said. The company did not confirm this. The Indian unit of the world’s
largest foods company has been raising prices across its portfolio — baby food, dairy, chocolates and noodles. The price hikes, which have been in double digits, have already kept consumers
away from buying company’s products. Analysts said Nestle is putting margins before volumes. It has continued to take bold price hikes in the last two years and also in the last six months
to maintain healthy margins. Volume growth at 6.8% in calendar year 2011 was the lowest since calendar 2006. Manoj Menon, analyst with Kotak Securities, said the company’s volume growth in
the first quarter of calendar year 2012 has likely declined by 5%. “Its (Nestle’s) priorities appear to be profit growth at any cost (expanding gross margins to mitigate lower volume
throughput due to moderate demand conditions for food products in general and higher overheads costs due to capacity expansion),” Menon wrote in a note to clients last week. Company’s baby
food products such as Cerelac, Lactogen have become expensive by 40% in the last two years alone. In the last six months, this category, where the company is the market leader, has seen a
price hike of 10%. In Maggi Masala, its highest selling variant, the company has hiked prices by 13% over the past two years. In chocolates, the company has taken a 32% increase in prices
over the last two years and around 12% in the last six months alone. According to Kotak’s Menon, Nestle’s volume growth in the first quarter of calendar 2012 has declined by 5%.