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Swiss food giant Nestle lowered its sales growth outlook for 2024 Thursday as it slowed its price increases in the first half of the year, with under-pressure consumers shopping for cheaper products.
Shares in the group, whose brands range from Nespresso coffee capsules to Purina dog food and Haagen-Dazs ice cream, fell on the Swiss stock exchange following its earnings report.
Nestle said it now expected organic sales growth -- which excludes currency fluctuations and acquisitions -- of "at least three percent" this year, down from its previous target of four percent.
The global packaged-food giant and its rivals had logged high sales growth in the past three years as they raised prices to make up for higher costs due to soaring inflation.
The company increased prices by two percent in the first six months of the year, compared to 9.5 percent over the same period in 2023, mirroring a slowdown in inflation in major economies.
Organic growth slowed to 2.1 percent in the first half, down from 8.7 percent in the same period last year.
"With this inflation wave now moderating very quickly, we are in a transition period," Nestle chief executive Mark Schneider said in a conference call.
"As a matter of prudence, we felt that it was important to adjust our organic growth expectations for the year," Schneider said.
North America is a good example for what is happening in certain markets around the world, he added.
"There is value-seeking behavior among consumers. There is pressure, especially in the low-income range. It's a period right now where consumer mood is kind of muted," Schneider said.
"That sort of value-seeking approach is something that we also find in large European markets," he added, pointing out that there had also been a weak second quarter in the Chinese economy with "a lot of price competition".
Nestles total sales fell 2.7 percent to 45 billion Swiss francs ($51.2 billion) in the first half of the year.
Its net profit remained stable at 5.6 billion francs.