Nestle and Unilever Face Challenges Amid Slower Price Hikes

Nestle and Unilever are facing slower growth in first-half sales as rising prices fail to lure back cost-conscious consumers. While Unilever shares rose after maintaining its sales forecast, Nestle shares fell due to a lowered sales outlook. Both companies face increasing pressure to manage costs and maintain brand strength.

Nestle and Unilever are grappling with slow first-half sales growth as their price hikes haven't appealed to cost-conscious consumers, the companies reported on Thursday. Despite maintaining its annual sales forecast and beating profit expectations, Unilever saw its shares rise 5%. In contrast, Nestle shares fell 4% as the company lowered its sales outlook.

Facing a prolonged global cost-of-living crisis and nearly three years of rapid price hikes, consumer goods companies are striving to entice shoppers who had shifted to more affordable private label products. Nestle's CEO, Mark Schneider, noted increased value-seeking behavior among consumers, especially those from low-income groups.

Both firms beat market expectations for first-half sales volumes and profit margins. However, Nestle's lowered organic sales outlook and Unilever's cautious forecast for margin expansion reflect the broader challenges faced by the consumer goods industry, including rising costs of raw materials and energy.

(With inputs from agencies.)