LONDON/PARIS (Reuters) – Food giants Danone and Nestlé said on Thursday they would slow the rise in their prices in 2024, after two years of sharp increases that pushed consumers to look for cheaper alternatives.

Danone, owner of brands including Evian and Badoit bottled waters and Activia yogurt, however, warned that prices would continue to rise, citing the need to offset labor and shipping costs. .

Danone’s statements follow those of its British rival Unilever, maker of Ben & Jerry’s ice cream and Dove soap, which also announced this month that price increases would begin to ease.

For more than two years, the processed goods sector has continued to burden consumers with ever-increasing prices, citing rising production costs that began with the COVID-19 pandemic and have been exacerbated by Russia’s invasion of Ukraine.

From sunflower oil to freight, everything has become more expensive, straining global supply chains and fueling a prolonged cost-of-living crisis.

“We haven’t seen such a spike in inflation since 1973, 1974,” Mark Schneider, Nestlé’s chief executive, said at a news conference Thursday.

The Swiss group, which markets products under the Maggi, KitKat and Nescafé brands, is the world’s largest processed food company.

Investors and analysts have raised concerns that companies are pushing prices too far, recommending that they focus more on marketing and innovation.

Fears over the cost of living are also helping cheaper private label brands capture market share.

Rising prices have weighed on the competitiveness of major brands, and Unilever Chief Executive Hein Schumacher said earlier this month that the company’s “competitiveness remains disappointing.”

This quarter, companies said prices would rise at a much slower pace in 2024 as they absorb higher costs.

“Prices will be much lower this year than last year,” said Mark Schneider of Nestlé. “Growth, from this year, will be based much more on volume and diversity,” he added, specifying that it would probably be a “fairly universal” phenomenon.

As a result, Nestlé anticipates a slowdown in its organic sales growth to around +4% in 2024 as well as a “moderate increase” in its underlying commercial operating margin (UTOP).

Nestlé’s UTOP margin was 17.3% in 2023, up 40 basis points at constant policy rate.

Danone’s CEO, Antoine de Saint-Affrique, was more measured during a conference call on the results. The group anticipates a slowdown in inflation, but warns of possible volatility.

Hein Schumacher declared at the start of the month that Unilever continued to anticipate inflation in 2024 but at “normal” levels, between 2.5 and 3%.

(Reporting Richa Naidu in London and Dominique Vidalon in Paris; Stéphanie Hamel, editing by Kate Entringer)

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