Will Nestlé be the next Unilever?

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Nestlé have warned they were likely to go the same way as Unilever and hike up their prices to offset the pound devaluation.

Following disappointing sales figures posted yesterday the Swiss manufacturer of brands KitKat and Smarties has cut its sales forecasts, downgrading predicted rises in the next nine months to 3.5 per cent instead of 4.2 per cent.

Chief executive Paul Bulke said of the UK arm of Nestle: “They’re gonna have to sort it out and do that responsibly. That means seeing all possible other actions to absorb the [devaluation].”

Despite these thinly-veiled warnings of potential price hikes to retailers, Bulke added this would be offset by the fact that much of the UK’s biggest selling Nestlé products are also produced here.

READ MORE: Much Marmite about nothing?

This is also true of Marmite, which recently made the headlines as Unilever hiked up its prices along with many other popular products. 

As Marmite is made 100 per cent in the UK, Tesco accused the company of exploiting the weak pound to raise prices.

Retail analyst Nick Bubb said price hikes were inevitable, and UK supermarkets and shoppers would have to get used to foreign food companies rising prices during the weak pound.

READ MORE: “Marmageddon” avoided as Tesco and Unilever settle dispute

“These things are inevitable, given sterling weakness and the supermarkets can’t expect suppliers to shoulder all the burden,” he said.

The “inevitable” price rises are likely to lead to a return to food inflation seen during the financial crash. 

Addressing the IGD debate on Tuesday Tesco boss Matt Davies said inflation could prove “lethal” to countless families on low income.

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