A top executive at Nestlé, the world’s largest and most diversified food and beverages company, told the audience at the Bernstein conference on Thursday that food and drinks sold globally have been in a slump since the start of the year.
“People are consuming less, or they’re eating less or they’re wasting less or they’re eating more out of home,” outgoing CFO Francois-Xavier Roger said during the conference, which Bloomberg quoted. He said, “It’s difficult to know. I don’t think it will last.”
Major consumer goods corporations have increased sales recently through substantial price hikes, causing drops in demand. Roger continued, “Nestle hasn’t raised prices much since the start of April.”
The CFO blamed the end of the Covid-era emergency food stamps and a slide in consumer savings on demand woes. He said Nestle’s China business remains in a slump but is optimistic about Europe.
For some context, it’s important to note that in the first quarter, more than 30 million Americans across 32 states saw a reduction in their ‘enhanced benefits’ for the Supplemental Nutrition Assistance Program (SNAP). Many of the precipitants have since faced a “hunger cliff.”
Roger is correct about weakening consumers due to dwindling savings amid more than two years of high inflation, eating away any wage gains. The Fed’s latest beige book warned consumers “exhausted their savings.”
Also, the consumer is beginning to hunker down as the credit card binge wanes while paying down debt appears to be the move. Can anyone say the consumer is in the midst of a balance sheet recession?
Morgan Stanley’s Mike Wilson has stated the consumer is falling off a cliff.
And Roger’s comments about sliding food and drink demand is an ominous sign of a weakening consumer.