Nestlé, the Swiss multinational food and beverage company, has warned that consumers may face further price rises for popular products like KitKat and Nespresso pods in the second half of 2025.
The company is confronting rising costs due to soaring commodity prices alongside additional pressure from U.S. tariffs, which threaten to squeeze profit margins.
Since early 2023, prices for essential commodities such as Arabica coffee have more than doubled, while cocoa costs have tripled. These increases led Nestlé to implement sizeable price hikes earlier in the year.
Chief Executive Officer Laurent Freixe stated during a recent earnings call, “Will we need a bit more [pricing action]? We might need a little bit more, but most of it is already done and will be seen reflected in the next quarters.”
For the first half of 2025, Nestlé achieved organic sales growth of 2.9%, slightly above analyst expectations. However, total reported sales fell 1.8% to 44.2 billion Swiss francs, impacted by a strong Swiss franc, which reduced earnings on conversion. The core operating profit margin slipped to 16.5%.
Chief Financial Officer Anna Manz highlighted currency fluctuations and increasing U.S. tariffs as key challenges ahead, warning, “Second half margins will be significantly below the first half.” She added that further price rises would likely be insufficient to fully counterbalance escalating costs, tariffs, and adverse foreign exchange effects.
Despite these pressures, Nestlé maintained its 2025 guidance for improved organic growth compared to 2024 and a core operating profit margin of at least 16%.
Nestlé’s performance has lagged behind peers like Unilever and Danone, amid industry-wide inflation and rising competition from private-label brands.
Since becoming CEO in September 2024, Freixe has emphasised streamlining the company’s portfolio, saying prior acquisitions had “weakened the fabric” of the business. His “six big bets” focus on key categories: infant formula 9, Nescafé Espresso Concentrate, Maggi’s air fryer range, chocobakery, Purina’s gourmet pyramid-shaped cat food, and Nescafé Dolce Gusto Neo.
The company is also reviewing underperforming vitamin brands such as Nature’s Bounty and Osteo Bi-Flex, with possible divestments to sharpen focus and redirect resources. Freixe described these moves as vital to “strengthen our growth ambitions for the future.”
Facing a challenging environment shaped by inflation, supply chain disruptions, geopolitical tensions, and tariffs, Nestlé aims to protect profits through innovation and premium offerings. Its increasing commitment to sustainability initiatives also forms a core part of its forward strategy, likely to appeal to consumers and investors.