In the shadow of inflation and reduced demand, the Nestlé And other giants in the food industry, but also cosmetics, limit price increases on basic products, attempting to maintain their competitiveness and win the confidence of them again consumer in the US.
In the current quarter, the weak demand by consumers and industry, especially in North America, is putting pressure on most food producers, such as Nestlé, according to Handelsblatt.
More specifically, Nestlé’s activities (Kitkat, Nescafé) remained stagnant in North America during the first quarter of the year, while its organic sales rose 2.8% worldwide. Correspondingly, Mondelez (Milka, Oreo) suffered a 3.6% sales on the same market, while the group totaling 3.1%, while Coca-Cola growth in the US was reduced to 3%, compared to 6% internationally.
In the case of Henkel, who is active in North America with brands such as Persil and Pril, she recorded the worst performance in the world. Specifically, the German company’s organic sales – tailored to acquisitions and foreign exchange fluctuations – fell 5.6%, against a global reduction of only 1%.
“The US government’s debate on duties have significantly increased the uncertainty in world markets,” Henkel CEO Karsen Knobel said on Thursday. With a share of 27% of sales, the US is Henkel’s largest uniform market.
The impact of US duties, which are only slightly included in the first trimester, mainly have an indirect impact on consumer goods companies. This is due to the fact that most of the large brands make their products locally. Over 90% of Nestlé sales in the US are produced there, while the rate for Henkel is 85%.
However, US President Trump’s diverse policies feed fears of recession and increase unemployment and force consumers to make fewer markets in the US market, which is important for consumer goods companies. “Some political and economic decisions have further weakened the already weak consumer confidence,” said Nestlé CEO Laurent Freixe.
Taking into account this situation, the Pepsico Beverage Production Company, Pampers and Ariel Procter & Gamble (P&G) and KRAFT HEINZ Kezap brand have downgraded their annual goals.
P&G still expects an organic sales increase of 2%, but initially assumed it would reach 5%. According to P&G’s financial director Andre Schulten, the company had already noticed in February that retailers were demanding less.
While consumers in the US have purchased electronics in advance, for example, due to their concern for prices rising, there were only individual cases of massive branded markets, such as long -lasting cosmetics or foods in supermarkets.
On the contrary, even in the US who love brands, consumers are increasingly turning to the cheapest brands of American retailers. So, it did 45% in the first quarter of 2025 in front of high inflation, according to a recent study by Consulting Company Global Data. In 2023, this percentage would be just over one in three people.
Higher costs because of duties
Trump suspended punitive duties for 90 days. However, there is a basic duty for all US trade partners and a 10% rate for EU countries. According to experts, the duties currently in force already make the global cost of raw materials and logistics more expensive. Some manufacturers are also likely to move them to retailers and consumers.
“Duties are inherently inflationary,” said P&G chief executive Jon Moeller. The company estimates that duties will increase the annual cost of up to $ 1.5 billion. This could make prices increase by 1% to 2% in P&G. These will vary depending on the product, the brand and the country of sale.
Henkel Knobel CEO said that “customs duties will also lead to a higher cost for us.” However, these could be absorbed. However, Henkel will not react to tariffs with price increases.
In addition, economists expect moderate price increases for everyday products. According to the Budget Lab of Yale University, applicable duties will lead to rising prices of fruits and vegetables over 5% in the short term. Prices for sugar products and ready -made meals are likely to increase by more than 4%.
The producers of trademark were not so cautious in the recent past. After the pandemic and war in Ukraine, they are struggling at a significantly higher cost, which was recently aggravated by rising prices for basic coffee and cocoa goods, for example. Pepsico, for example, raised its prices by 34% between 2021 and 2024 and Mondelez by 31%.
Through prices, cuts, cuts and selling trademarks with low profit margins, many consumer groups have managed to maintain or increase their profitability despite crises.
However, trademark producers lost customers for their own brands as a result. Nestlé, for example, has lost a market share in its US business in the last 18 quarters, according to Market Research Company Nielsen. The industry must now be careful.
Nestlé’s pizza became cheaper in America
Many consumer goods companies had announced lower prices for 2025 compared to previous years and wanted to focus strategically on their sales increase.
But Trump put the companies in a difficult position. If they re -raise their prices due to duties, they risk losing a further market share. If not, this could squeeze profit margins. These effects are not yet visible on current balance sheets, as most consumer products do not announce profit data for the first quarter.
Patricio Ibanez, a senior partner of McKinsey Consulting Company, warns: “We would not recommend price increases. Private labels grow four times faster than big brands in the US. ” In fact, some manufacturers have even canceled some of their price increases in America.
Nestlé reduced its prices in the US by 1% in the first quarter compared to the corresponding quarter last year, while the Swiss company increased its prices by 2.1%. The results of most price negotiations between retailers and manufacturers in industrial countries are usually reflected in the balance sheet in the first quarter.
And Nestlé Ferix Managing Director promised to reduce prices for frozen pizzas in America in order to win consumers back. “We are trying to deduct as much as possible from the price to cover our costs, while taking into account the reaction of consumers to a competitive environment.”
Mondelez reduced its prices in America by 0.5%, while the manufacturer increased by 6.6%worldwide. And Reckitt (Durex, Sagrotan) increased its prices by only 0.9% in North America, compared to 2.8% worldwide. “Consumer confidence has diminished and we see that consumer standards are changing,” Reckitt Chief Executive Chris Licht said in terms of private labels.
Lidl and Walmart are trying to keep low prices in the US
The fact that manufacturers maintain their prices at low levels is also due to the negotiating power of major US retailers. They have announced that they will “bargain with producers” instead of posting prices directly to customers, observes Joshua Mask, Professor of Economics at Temple University in Philadelphia.
The three largest US supermarket chains Walmart, Costco and Kroger represent more than one -third of sales. The bosses of the big retailers are said to have recently warned Trump of supply chains and empty shelves due to duties.
The German Lidl supermarket chain has also promised to keep prices at low levels – in part by reducing its own cost. “Instead of replenishing the shelves track-piece, the products are placed on the shelves in delivery boxes,” one spokesman explained. Electronic price labels have also been entered for employees to save time. About 85% of the Lidl product range in the US comes from the US.
Clubs want to reduce quantity in products
Meanwhile, Unilever (Dove, Langnese) resisted the trend and has managed to increase its sales in the US more than the world average rather than Trump. The group has optimized its portfolio in North America in recent years and introduced more premium products aimed at a more wealthy clientele.
Fernando Fernandez explained that the company is fully aware of continuing pressure on consumers. However, the cost of raw materials has increased, especially for personal care products and ice creams. “Pricing is always the ultimate solution to protect our profit margins,” he said, citing the prospect of smaller packaging sizes, for example.
This move makes the products more expensive, but prevents further raising the price on the shelf, which is the decisive factor for most consumers. Mondelez also wants to bring more affordable products to the market, “in view of the ongoing consumer frustration in the US by prices,” said CEO Dirk Van de Put.
Two or three years ago, consumers would pay just over four dollars for a biscuit package. Now they realize that the price should “ideally be under three dollars”. Smaller packages or cheaper ingredients are feasible to reduce costs. However, Van de Put remains skeptical: “I do not expect that consumer confidence will be significantly improved in the near future.”