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Nestlé is largely “immune” from the impact of tariffs, the company's chief executive said, with the world’s largest food producer benefiting from its more localized manufacturing footprint.
Laurent Freixe told reporters while the Lean Cuisine maker is closely watching global trade and tariffs, it benefits from the fact that most of the products sold are manufactured in their respective markets. In the U.S., for example, Nestlé produces about 90% of what it sells domestically.
“We are in a unique, privileged position, which is giving us resilience to significant movements,” Freixe, who took over as CEO last September, told reporters following the release of Nestlé’s fourth-quarter earnings.
Food and beverage makers are closely following the impact that tariffs from the Trump administration could have on their businesses. Coca-Cola CEO James Quincey said earlier this week the beverage maker could switch to more plastic bottles from aluminum cans if input costs for the commodity become too expensive.
For Nestlé, the Switzerland-based company has “lots of mechanics to mitigate any tariff that we do see come through, be it pricing, be it changing our sourcing,.” according to CFO Anna Manz.
She noted Nestlé’s guidance for 2025 does not factor in any impact from tariffs. While it’s hard to predict what is going to happen with trade policy, Manz warned any new duties could “charge the inflationary environment relatively quickly.”
Tariffs would raise costs at a time when CPG companies already feel pressure from a prolonged period of inflation. Businesses have raised prices to boost sales and offset higher expenses, but those moves have forced consumers to cut back on how much they buy or switch to private label or more innovative brands.
Nestlé has had trouble getting consumers to come back, particularly in frozen items such as pizza. The company recently lowered pricing and took steps to improve quality in the U.S. in an attempt to win back customers.
Nestlé said it is planning further price increases for cocoa and coffee, two commodities grappling with record-high prices. Manz told reporters how much Nestlé increases prices for products with coffee or cocoa will depend on how consumers respond, though she said they are “both very resilient categories.”