Major Signal on Prices! Unilever and Nestle warn: Consumers will continue to face price hike pressure in the future.

"In announcing a significant price increase to offset the soaring costs of goods, Europe's two super blue-chip companies - Unilever Plc and Nestle SA - both reported first-quarter sales that exceeded market expectations. These two consumer sector leaders lost some market share due to inflation during the COVID-19 pandemic, and now these consumer giants warn that with the escalation of the global trade war caused by Trump's tariff policy and the spike in commodity prices, global consumers will have to bear a large part of the costs. "We are raising prices as much as possible to cover the increasingly high costs, while paying attention to consumer reactions in a competitive environment," said Laurent Freixe, CEO of Nestle, in a performance call with analysts. "Weak consumer confidence is evident not only in the U.S. market but globally as well." Over the past year, the soaring prices of commodities such as coffee and cocoa have impacted Nestle and its food and beverage peers, forcing them to either raise prices or accept compressed profits. In some markets, price hikes have reached double digits. When prices are raised too much, consumers may switch to cheaper unbranded alternatives - a lesson these two consumer giants have learned after the COVID-19 pandemic. Currently, President Trump's leadership in the global tariff battle threatens to further suppress global consumer demand and exacerbate concerns about global economic slowdown. Analyst Robert Moskow of TD Cowen pointed out that large food companies such as Nestle now have to act cautiously: they significantly raised prices during the COVID-19 pandemic, severely weakening the solid position of their brands built over the years and raising questions among consumers about their value for money. Both consumer giants currently stated that they will selectively raise prices, and both reiterated their expectations for sales growth improvement. Nestle - whose sales growth in 2024 fell to the lowest level in decades - and said that price hikes in some markets for products such as Nespresso coffee and KitKat chocolate would only result in limited customer loss. Freixe stated in the performance call that in the developed markets that Nestle focuses on, most negotiations for substantial price increases usually occur at the beginning of the year, so the company expects that most of this year's large-scale price increases have already ended. Cedric Besnard, an analyst at Citigroup, wrote in a recent report that although Nestle is somewhat comforted by the lack of "new negative factors," its performance "does not resolve investors' long-term questions about the company's portfolio of consumer products or the path to sales recovery." In the U.S. stock market, most retail stocks focusing on consumption have significantly underperformed the S&P 500 index since April, and the U.S. financial markets have seen a rare "trio kill" of stocks, bonds, and currencies. The main logic is that global funds' confidence in holding U.S. dollar assets is uncertain due to the huge economic growth uncertainty caused by Trump's tariff policy, and most investors are betting on the trend of inflation coming back with Trump's aggressive tariff policy, which may lead to U.S. consumers cutting back on spending, which has been tight in recent years due to persistently high inflation. Data from the University of Michigan's consumer survey shows that the initial value of the consumer confidence index in April hit its lowest level since June 2022, and consumers' inflation expectations for the next year reached their highest level since 1981. The New York Fed's previously released March consumer expectations survey showed that consumers' confidence in their future financial situation further deteriorated, with the percentage of respondents believing that their family's financial situation would be worse in a year rising to 30.0%, the highest level since October 2023, while the percentage of respondents believing that they might be unemployed in the next 12 months increased by 1.6 percentage points to 15.7%, reaching a new high since March 2024. Nestle and other consumer giants such as Unilever face major challenges in emerging markets For European and American consumer giants like Unilever, in developed markets such as North America, price increases and sales growth are more balanced, with sales unexpectedly jumping by 4% in the first quarter. However, the performance of the company's emerging markets business, which accounts for nearly 60% of its overall revenue and has been seen as a growth engine for the company for many years, has been unexpectedly weak, with revenue growth mainly achieved through price increases rather than sales volume boosts. Consumer trends in Latin America are particularly weak, with high interest rates and high inflation suppressing consumer demand in the region, leading retailers to actively destock in various Latin American markets. Unilever CEO Fernando Fernandez said that sales growth in Mexico and Argentina had turned negative. Fernandez took over as CEO in March this year after Hein Schumacher was dismissed. Nestle's sales in Asia's emerging markets, including China, also saw double-digit declines, and its business in Indonesia remained weak, with strong competition and some resistance to Western brands. "We are very aware of the ongoing pressures facing consumers," Fernandez said at the performance call and added that the company can respond by means such as reducing packaging sizes. "Price increase is always the last resort to protect profit margins." However, he noted that commodity prices have continued to rise this year, particularly impacting the personal care and ice cream businesses in emerging markets. Both companies have reiterated their expectations for sales growth improvement under the trend of price increases. Unilever expects a slight increase in its underlying operating margin compared to the 18.4% level in 2024. The share prices of Nestle and Unilever fell in early trading on the European stock market but then recovered some lost ground. "The biggest common point in the earnings reports of these two consumer giants is - price increases are inevitably coming," said Chris Beckett, research director at Quilter Cheviot. "Although everyone talked about inflation easing last year and the balance between sales volume and price.""Improvement in balance between them." "We can certainly understand the concerns of global consumers in the face of the uncertainty brought about by tariff policies," he added.Hola, cmo ests? Espero que ests bien.