Prices for milk and cereal will compound Nestle's problems, since coffee and cocoa are already at all-time highs

Prices for milk and cereal will compound Nestle's problems, since coffee and cocoa are already at all-time highs

However, this quarter's domestic sales for the firm exceeded Rs 5,000 crore, and its standalone net profit increased by 27%.

Due to the record-high prices of commodities like coffee and cocoa, the corporation will face additional challenges as a result of the price rise for these goods.

Major FMCG company Nestle India said on Thursday, April 25, that it anticipates challenges in the near future due to an anticipated increase in the price of milk, cereal, and grains.

The firm is seeing record high prices for commodities like coffee and cocoa, which will coincide with the increase in these commodities' pricing.

The corporation said that an increase in minimum support prices (MSP) is driving up the cost of cereals and grains.

The forecasted extreme summer weather will likely result in a rise in milk costs. The business is significant since it owns well-known brands like Milkmaid.

This year, meteorologists forecast that India will experience a short spring and a hard summer. By June, El Niño conditions should change to neutral, resulting in La Niña by September. According to most models, the India Meteorological Department predicts a shift to La Niña around July-September 2024, after which neutral conditions would prevail by April-June (73 percent certainty).

Amidst a continuing price surge, the business said that the prices of coffee and chocolate had hit all-time highs. With products like Nescafe and Kit-Kat, Nestle is a significant participant in the coffee and chocolate industries.

Dried cocoa bean prices just hit an all-time high. Climate change and the intricacies of the futures market are two factors that have an impact on this trend, which originates from tiny farms in West Africa. Such spikes have the potential to overwhelm policies meant to control such swings, and they are partially fueled by the financial instability brought on by sharp rises in input costs.

Due to limited worldwide supply, Arabica coffee prices continued to rise throughout the quarter, while Robusta prices hit all-time highs. Robusta prices increased by an average of 60% in Q4 over Q3 of the previous year.

This quarter, Nestle India's domestic sales exceeded Rs 5,000 crore.

"I'm happy to report that, in spite of obstacles brought on by growing food inflation and unstable commodity prices, we have achieved double-digit growth. The combination of price and product mix has allowed us to experience a solid growth momentum across our product range, according to Nestlé India's Chairman and Managing Director, Suresh Narayanan.

Nestle India saw a 27 percent increase in standalone net profit from Rs 737 crore to Rs 934 crore in the March quarter. The FMCG giant reported a 9% increase in revenue to Rs 5,268 crore in a regulatory filing on April 25.