Nestle warns price of KitKat could rise over pound turmoil

BREXIT could make the cost of KitKat bars rise, makers Nestle threatened yesterday.

Other favourites produced by the Swiss-based food giant also face a price hike.

Its brands include Aero, Quality Street, Jelly Tots, Toffee Crisp, Munchies, Rolos, cereal Shredded Wheat, Nescafe coffee and Felix pet food.

Nestle blamed the plunge in the pound following the referendum decision to leave the EU – but said price rises will not happen straight away.

Forced

The warning came just a week after “Marmitegate”, the spat which saw Nestle rival Unilever try to make Tesco pay more for the yeast extract spread and other products.

Tesco stood its ground, withdrawing the brands from its shelves and Unilever was forced to back down.

Nestle said yesterday that while 95 per cent of what it sells in the UK is produced locally, the weak pound had forced it to pay more when importing commodities such as cocoa and coffee.

As a result it plans to implement a combination of increased prices and costcutting measures.

Chief executive Paul Bulcke said: “The pound is going south and that is going to have some effect on certain imports and you can’t defy gravity.”

But he added: “I don’t say ... our costs go up one per cent – bang, we pass that straight on to the consumers – they would punish you.”

He forecast no near-term blanket price increases and said its UK team was looking at all options to deal with the steep decline in sterling.

But price increases could come later in 2017 if commodity prices continue to rise.

Britain is Nestle’s fifthbiggest market globally, representing about three per cent of sales.

The food giant is the latest company to be hit by a worldwide slowdown affecting food manufacturers and has posted its weakest underlying sales growth in more than a decade.

Nestle, which owns 13 UK factories, cut its sales target for the year after predicting European markets would continue to weaken.

Britain’s retailers and their suppliers have come under increasing pressure from a rise in import costs due to the fall of the pound.

Food import prices jumped 10.9 per cent in the year to September.