Nestle SA, one of the world's biggest food companies, has said a price hike of products is imminent due to volatile raw material prices. However, the company believes that if a price revision is done in a holistic and well-spaced manner along with value creation, it will build consumer confidence.

“I do believe you have to increase prices country by country. We don't produce prices. We produce enjoyment, nutrition and value. But if you have to do a price hike, you will have to do it holistically. In each country, the portfolio is different, inflation is different and raw materials are prices different. So it has to be done in a timely and spaced manner,” Mr Paul Bulcke, Nestle's global CEO, on an India visit, told Business Line.

Mr Bulcke's statement comes a week after Nestle India's last analyst meet which cited rising raw material prices as a major cause for concern in the coming quarters.

The Belgian-born head honcho of the Swiss group said rising food prices are a global phenomenon. “The whole basket is going up this time. The volatility and nervousness of the markets are showing up. The world is eating better and more. It creates tension in agriculture as there is an accelerating demand.…there is an increased need for raw materials,” he said.

Innovation

Stating that innovation was a core focus of Nestle's internal philosophies, Mr Bulcke said the thrust was on creating value. “If we can maintain our company on creating value, people are going to value it and pay for it. We have been inventing value products so that the proportion of raw material used is less. Value creation now is more than what it was ten years ago. Innovation is another aspect and each innovation is adding value to use less of raw materials.”

On criticism about companies increasing prices of their products and reducing grammage simultaneously, he said, “It is being smart. I don't want you to eat so many calories but enjoy the same benefit with lesser quantity. What we do, though, is lighten the packaging materials. It is to give the same enjoyment at a lesser cost. In that direction, we have smaller packs. Our idea is not to cheat the customer. You have to rewire your products. We have technologies and look for alternative ways to have the same nutritional blend with a lesser amount of raw materials.”

Nestlé, Switzerland's biggest industrial company, has 283,000 employees and 460 factories worldwide, which produces baby formula, breakfast cereals, coffee, chocolate, mineral water, pet foods, ready meals and dessert ingredients among others.

Desserts

Asked if it was planning to introduce its desserts and frozen range, Mr Bulcke said, “We are looking at it. There are dimensions which we are looking to scale up. However, we cannot do it due to lack of certain essential infrastructure, like cold chains.”

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