Nestlé’s Brabeck-Letmathe forecasts higher costs

However, speaking at the World Economic Forum recently, Nestle’s chief executive Peter Brabeck-Letmathe noted that these higher costs will be offset by cost cuts.

This prediction coincides with an analysis by Standard & Poor’s, which said that most of Europe’s consumer goods companies, including food processors, will offset the impact of energy prices by trimming operational costs.

“In general, I would forecast an increase somewhere between five and 10 per cent on all raw material, packaging and energy costs,” Brabeck-Letmathe is reported to have said by Forbes magazine. “But on the other hand we will have the possibility with our rationalisation programmes…that we will again balance part of this increase out.”

Meanwhile, UK dairy processor Arla Foods noted that prices for HDPE resin, a main packaging material, had risen 30 per cent since July to over £850 per tonne.

Diesel fuel costs were also likely to be up £2m this year for the dairy, along with gas and electricity bills, which are predicted to be 40-50% higher for the same units it used in 2005.