Nestlé, rivals ease US price hikes in bid to calm shoppers

Household goods and packaged food makers are easing US price increases to avoid losing American shoppers to retailers’ less expensive private-label brands as a global trade war tests the limits of their pricing power at grocery stores.

- RICHA NAIDU

US President Donald Trump has imposed broad tariffs on several countries around the world in recent months, sparking worries that the US economy will be pushed into recession, with commodities and basic utilities becoming more expensive. Trump met with major retailers, including Walmart and Target on Monday to discuss the tariffs’ impact on their imports.

"Some political decisions, economic decisions taken have rather undermined already soft consumer confidence," Nestlé CEO Laurent Freixe told journalists yesterday during an earnings call. Nestlé, the world's biggest packaged food company and maker of Nescafe and Kit-Kat, cut prices in the United States, its biggest market, by 1%.

"When it comes to pricing, we have to take into account the customers, the consumers, competitors' moves," Mr Freixe said. "We are trying to take as much price as we can to cover our costs while being mindful of the consumer response."

Dove soap maker Unilever, which also reported earnings yesterday, noted "declining consumer sentiment" in North America, where it raised prices by only 2.1%.

Nestle, Unilever and other makers of household products and packaged food need to show caution with price hikes to avoid alienating American shoppers who are worried about having less money to spend on groceries, industry consultants and investors said. In grocery stores, these companies compete head-to-head with retailers' private label products, which are generally lower priced.