Recent data from Nielsen, a US information and market research company, indicates that consumer goods giants like Nestle and Reckitt may report sluggish sales growth in the European and American markets for the second quarter, as consumers are more inclined to choose brands with slower price increases.
Analysts and investors have expressed concerns over the past few quarters that food, beauty, and household product manufacturers are struggling to win back certain consumers who were alienated when manufacturers raised prices over the past two years post-pandemic.
Global cost of living crisis triggered by inflation has been affecting the ability of companies in the consumer goods and food industry to lower prices or control prices, determining which companies can achieve better sales performance, increase market share, and protect profit margins.
Nestle failed to meet its organic sales growth expectations for the first quarter in April, as the world’s largest packaged food company continued to raise prices, resulting in reduced product sales, especially in North America.
According to data analyzed by Barclays from Nielsen, estimated sales figures in USD at European stores for companies like Reckitt, Kellogg, and P&G have declined in the past three months.
Likewise, it is predicted that Reckitt, Nestle, and Henkel will report a decrease in sales figures in their US stores for the second quarter, along with a decline in market share in several categories.
PepsiCo’s second-quarter revenue data released last week fell short of expectations due to a slowdown in snack and soda sales in its main market, the US, as a result of a series of price increases and competition from own-brand products.
Waverton Investment Management, a UK-based company investing in Unilever and Reckitt, whose portfolio manager Tineke Frikkee stated, “Unilever has explicitly stated its intention to regain lost market share. This can be achieved through lower pricing but typically more indirectly through promotions like buy one get one free.”
After performing poorly for several consecutive quarters, Unilever is working on improving productivity to restore growth. The company informed executives last week that by the end of 2025, it plans to cut up to 3,200 jobs in Europe to reduce operating costs.