By Giorgos Lampiris
Nestle has taken promotional actions to contain the volume of coffee in the market, while this move is also a way to compensate for the impact of price increases on them. As stated by Xristos Alevizos, Business Executive Officer in Nestle’s coffee sector for Greece, Cyprus and Albania “What we are trying to do, we do not have an increased promotional activity so as to limit the drop in the volume of coffee sales”. NielsenIQ the inflation in the coffee category is around 4%-5%, while the corresponding percentage for Nestle records the inflation of the category of 3% on average in the coffee products that the company trades (inc. including promotional actions)”.
It is noted that at the eight-month level (January – August 2022) the total volume sales of coffee in the supermarket are stable at 7,400 tons with zero change compared to 2021 during the corresponding time period. In terms of total coffee sales in turnover in Greek supermarkets in the eight months of 2022 they were increased by 5% according to market data.
N. Emmanuilidis: 65% increase in raw materials, 100% increase in electricity
Regarding the increase in costs, from the side of the president and CEO of the multinational Nikos Emmanuilidis, he noted that “we are trying to manage in various ways”. According to him, the increase in the prices of raw materials within 2022 amounted to 65%, energy to 100% and packaging costs increased by up to 40% compared to a year ago.
It is noted that in the Nestle coffee factory located in Oinophyta, Greek Lumidis Papagalos coffee, instant Nescafe and Buondi espresso are roasted and packaged, while the products from this factory are exported to more than 10 countries. The factory employs 174 people.
The head of Nestle Hellas said, among other things, that the pressure coming from the increase in costs is likely to affect the profitability of the company. Regarding the defenses that the company has developed against the increased operating costs, Mr. Emmanuelidis referred to the investments that have been made in previous years, such as the installation of LEDs in the Oinofyta coffee factory and the addition of modern mechanical equipment that offer savings in consumption.
As mentioned by Nikos Emmanouilidis, among others, on the sidelines of Nestle’s event at Inofyta regarding increases and cost increases in goods and services: We saw a shift in consumption towards super markets during the pandemic, while with the opening of the consumption market moved to the outhouse. we have seen some shortages in coffee.”
We will recall that in 2021 there was a frost in Brazil, which is the main coffee producing country in the world, which resulted in a reduction in the available quantities of coffee due to the destruction suffered by the crop and, by extension, the rise in world coffee prices . However, the frost also affected the coffee shops, with the result that global production is reduced again this year, resulting in a further impact on the reserves of the coffee planet, which also has an impact on the increase in the price of the product.
Mr. Emmanuelidis also mentioned the problems caused by the pandemic in transport, where several cargo transport counters remained stationary in many regions of the world. “By the time one got in there, the transportation cost was an order of magnitude higher, followed by the energy cost factor. We haven’t been able to assess the final picture so far.”
Investments of 13 million in coffee – New movements of 3 million euros by 2023
In the field of investments, Nestle Hellas has a total of 13 million euros over the last five years in the coffee sector and in the wine producing companies. In the near future, further investments are planned in new storage with a capacity of 2,000 tons of green coffee and the amount of the expenditure does not come to 2 euros, as well as in the installation of photovoltaics in the factory, with this specific expenditure being estimated at 1 million euros. The new investments are scheduled to be completed in 2023.