Nestlé adapts as hoarding resumes in Asia and North Africa

Jars of Nestle’s Nescafe Gold coffee are pictured in the supermarket at Nestle’s headquarters in Vevey, Switzerland February 13, 2020. REUTERS/Pierre Albouy/File Photo GLOBAL BUSINESS WEEK AHEAD

Join now for FREE unlimited access to Reuters.com

LONDON/GDANSK/KAZAKHSTAN, Sept 21 (Reuters) – Seyda Bal, who works at a bank in Istanbul, is so worried about rising grocery prices that she has fallen into a pandemic-era habit: hoard packaged goods like coffee and toilet paper.

“I buy a lot of staples like oil, pasta, rice, tahini, molasses…thinking that next month they will cost twice as much,” says Bal, 27. .

Russia’s invasion of Ukraine has pushed energy and grain prices to unprecedented levels, driving up the cost of packaged goods. This has been felt particularly acutely in parts of Asia and North Africa, where people spend a higher proportion of their income on food and fuel than in the United States and Europe. which prompted some shoppers to stock up on non-perishable items.

Join now for FREE unlimited access to Reuters.com

The trend has not gone unnoticed at Nestlé (NESN.S), the world’s largest packaged food company and home to more than 2,000 brands including Cheerios, Nescafe and Maggi.

The Swiss group is adapting its product lines in the region to “make them more meaningful for the consumer”, and is considering whether to make certain products “more affordable”, according to Karim Al Bitar, head of consumer research and market intelligence at Nestle’s Middle East and North Africa (MENA) Unit.

This could include increasing the size of packaging and switching to cheaper ingredients.

“Nestlé sees hoarding with broth, to some extent soups, coffee for sure,” Al Bitar told Reuters.

Maggi products and Nescafé coffee sachets are among the popular products for storage, he added.

Nestlé is working with local partners to overcome supply issues and has so far managed to keep stock on shelves, the company said in an emailed statement.

The MENA region contributes more than 4%, or 3.7 billion Swiss francs ($3.9 billion), to Nestlé’s annual sales. The region that includes Central Asia accounts for around 9%, or 8 billion francs.

MAKE STOCK OR PAY MORE LATER

Shoppers are spending less on non-essentials such as electronics, clothing and household items, while demand for packaged food and personal care items is on the rise, said Hani Weiss, CEO of Majid Al Futtaim Retail, which manages more than 450 Carrefour stores in 16 countries. in the Middle East, Africa and Asia.

“What does that tell us people are worried about? Inventory availability,” Weiss said, adding that the retailer was seeing inflation around 9.5% on average and particular pressure in countries such as Egypt, Kenya and Georgia.

Several countries in North Africa and Central Asia suffer from recurrent shortages of basic necessities. Euromonitor International analyst Kamile Botyriute said people in Tunisia, Algeria, Libya and Morocco were struggling to find flour, sugar and baked goods. In August, some stores in Tunisia began rationing items to prevent consumers from hoarding, Botyriute said.

“I bought about 10 bags of 50 kilograms of flour and as much sugar,” said Eldar, 28, an entrepreneur based in Almaty, Kazakhstan. “There are rumors that sugar shortages are expected and I wanted to have a stock.”

In the same town, Ivan, 47, a furniture designer, said: “Prices can go up, the dollar (exchange rate) can go up. I’ll have to pay more later.”

BILLS, BILLS, BILLS

Inflation is rising at a faster rate in many Central Asian and North African countries than in North America or Europe, where consumer price growth in the 19 countries sharing the euro s accelerated to reach 8.9% in July.

Turkey’s annual inflation hit a 24-year high of 80% in August, while Egypt’s accelerated to 13.6% in July. In many cases, weakening local currencies increase import costs.

“In Turkey, consumers are adjusting to the reality of extremely high inflation. Despite higher prices, we are seeing consumer demand and market volumes holding up, in part due to the burden of custody. eat,” Unilever CEO Alan Jope told ULVR.L in July.

Sinem Ozel, 31, a marketing expert living in Istanbul, stocked up on items such as oil, toilet paper, pasta, sugar and dishwasher detergent. She used to spend around 300-400 Turkish liras ($16.71-$22.27) for a month of shopping, but now she spends the same amount in a week and sometimes buys the three-in-one pack for 20% extra instant coffee from Nescafé.

But not everyone can afford to accumulate.

“We don’t have the money to buy large quantities of things,” said Layla, a 60-year-old customer, standing outside the Lafayette market in Tunis, Tunisia. “Most of the time we have to get a loan from relatives to complete the month.”

($1 = 18.1455 lira)

($1 = 0.9643 Swiss francs)

Join now for FREE unlimited access to Reuters.com

Reporting by Richa Naidu. Additional reporting by Mohamed Argoubi in Tunisia Editing by Matt Scuffham and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

Richa Naidu

Thomson Reuters

London-based journalist covering retail and consumer goods, analyzing trends including supply chain coverage, advertising strategies, corporate governance, sustainability, policy and regulation. Has previously written about US-based retailers, major financial institutions and covered the Tokyo 2020 Olympics.

About Thomas Hereford

Check Also

November is National Diabetes Month | Community

November is National Diabetes Month, a time when communities across the country come together to …