Kit Kat Chunky packaging are seen at a store in Poland on July 15, 2025.
Nurphoto | Getty Images
Swiss food giant Nestle said Thursday that prices for its KitKat bars and Nespresso coffee pods could rise further in the second half of this year, as U.S. tariffs risk exacerbating existing commodity price pressures.
CEO Laurent Freixe said that he was “satisfied” with broad price hikes implemented in the first half of the year, but said that company was still considering whether further action would be needed.
“Will we need a bit more [pricing action]?” Freixe said on an earnings call in response to a question on 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.”
Nestle shares were down 4.9% by 10:50 a.m. London time (5:50 a.m. E.T.).
The world’s largest packaged goods company posted better-than-expected first-half organic sales growth as it leaned on price hikes to offset higher input costs for its coffee and cocoa-related products.
Organic sales growth at the Nescafe and Purina owner was up 2.9% in the six months to June, above analysts’ average forecast of 2.8%. This was led by price rises of 2.7%, slightly ahead of the 2.5% forecast by analysts in a company compiled consensus.
“We face an unprecedented scenario, where two of our major commodities have reached historical highs,” Freixe said, referring to coffee and cocoa commodity costs.
Arabica coffee prices have more than doubled since early 2023, while those for cocoa have more than tripled.
Coffee and cocoa prices.
“We obviously had to take action. Being the leaders in the industry, we had to take action quickly,” Freixe added.
Nestle’s total reported sales declined 1.8% over the period to 44.2 billion Swiss francs ($55.7 billion), slightly more than analyst expectations of 44.6 billion Swiss francs. Underlying trading operating profit (UTOP) margins dipped 0.9% to 16.5%.
Chief Financial Officer Anna Manz said the company had faced headwinds in the first half from currency fluctuations, driven by a stronger Swiss franc, and minimal early impacts from U.S. tariffs. However, she said she expected those headwinds to worsen in the second half.
“Second half margins will be significantly below the first half, she said, noting that price rises would be “more than offset by the increase in input costs, tariffs and fx [foreign exchange].”
The company nevertheless maintained its 2025 guidance for organic sales growth to improve versus 2024 and for an underlying trading operating profit margin of 16% or above.
Fewer, bigger, better
Nestle’s stock has lagged major rivals such as Unilever and Danone over recent years amid weaker sales growth and revised guidance, even as the sector at large has come under pressure from higher commodity prices and increased private label competition.
Freixe, who took the helm in September, has vowed to refocus the business, saying a slew of acquisitions under his predecessor had “weakened the fabric” of the company.
“With our six ‘big bets,’ we are following a fewer, bigger, better approach,” Freixe said Thursday.
Nestle’s six ‘big bets’ refer to its priority product categories: Those include its infant formula 9, Nescafé Espresso Concentrate, the Maggi air fryer range, chocobakery, Purina’s gourmet pyramid-shaped cat food, and Nescafé Dolce Gusto Neo.
The company meanwhile said it was conducting a strategic review of some of its underperforming vitamin brands, including Nature’s Bounty, Osteo Bi-Flex, noting that this could result in divestment.
“All this is consistent with our approach across the group of focus and simplification,” Freixe added. “We are taking the right actions today to strengthen our growth ambitions for the future.”