What's going on?
Swiss Nestlé and British-Dutch Unilever – two giant consumer goods companies – reported results on Thursday. And while Nestlé caught a break, Unilever’s share price fell.
What does this mean?
Both Nestlé and Unilever reported growing sales in their third quarters. At Nestlé, strong coffee in North America (surprise, surprise) and infant nutrition pepped overall sales up 2.9% higher than the same time last year. Unilever (which counts “iconic” deodorant Axe among its products) likewise saw sales growth, of 3.8% – but a large part of that was due to it raising prices, rather than increasing the actual number of products sold.
Consumer staples companies (which sell things that people need, like food and hygiene products) have been battling against rising costs in recent years. Despite prices rising in major economies, Nestlé and Unilever have been worried that passing higher costs on to the retailers they supply might drive shoppers into the arms of own-brand discounters. With both companies biting the price increase bullet this past quarter – accounting for 0.5% of that Nestlé sales growth and 1.4% of Unilever’s – the good news is that the amount of goods sold has also gone up (tweet this).
Why should I care?
The bigger picture: Carrefour has passed the crossroads.
Speaking of discounters, French retailer Carrefour – which has gone to war with the price slashers and is, so far, winning – also reported sales growth on Thursday. Ignoring currency fluctuations, Carrefour’s overall sales were up by nearly 3%. In Brazil, Carrefour’s biggest market after its French home base, sales grew over 5%. Oba!
For markets: Sugar loaves in Brazil.
South America’s largest economy is on the up after taking a bruising from recent political scandals. The stock market is up in October, and the country’s currency, the real, is at its strongest in months. Nestlé’s Brazilian sales also grew in the third quarter and Unilever, which suffered earlier in the year from a Brazilian trucker strike, got its sales back on the road.