(10:47 GMT) *Nestle Sees Mid-Size Formats Being Squeezed, Head of Marketing Says (10:47 GMT) *U.S. Consumers Increasingly Focused on Affordability in Last Six Months, Nestle's Americas CEO Says (10:47 GMT) Consumers Shun Mid-Sized Packs Amid Price Squeeze, Nestle Says — Interview
By Aimee Look
Nestle is working to keep prices in check, as U.S. consumers fixate on affordability and buyers shift toward bulk or budget pack sizes, shunning middle formats.
Top executives at the maker of KitKat chocolate and Nescafe coffee have noticed consumers, pinched by inflation, are opting for either smaller portions or mega-sized value packs.
The value of large sizes is particularly attractive at the moment, according to Nestle's marketing and sales boss David Rennie. And for everyday treats, there is still demand--but more interest in smaller packs. Mid-sized formats, meanwhile, are getting the cold shoulder, Rennie said.
"In tough times, purchasing polarizes," Rennie said in an interview. "The bit in the middle always gets squeezed."
There isn't a market globally where consumers aren't feeling cash-constrained, Rennie said.
Consumer-goods brands are experimenting with different package sizes to keep stretched shoppers buying, betting that a wider range of products on store shelves can help them revive growth in sales volumes, which have been under pressure lately.
PepsiCo, Campbell's and Mondelez International are among the companies that have added smaller packages with lower-price options.
In the U.S., this split purchase behavior comes amid a growing focus on affordability over the past six months, said Jeff Hamilton, CEO of Nestle's business in the Americas.
"We really see the strain on personal spending in the U.S. It's even more pronounced over these last few months," Hamilton said in an interview.
The Swiss giant has been adapting its portfolio, pricing, and range of pack sizes to cater to consumers under pressure-while making sure that they are positioned for volume growth, he said.
Nestle is focused on increasing sales volumes--what the company calls real internal growth--rather than raising prices, Hamilton added.
In Nestle's coffee business, for example, customer prices can hinge on the volatile commodity. As cocoa bean prices fluctuate, the business will adjust prices up or down depending on its cost, while trying to keep them in check and offering lower-priced products like instant coffee, its chief Axel Touzet told The Wall Street Journal this week.
Volume growth is also front of mind for analysts ahead of Nestle's half-year results due later this month. A main question will be whether the company can deliver on volumes, Barclays analyst Warren Ackerman wrote in a note.
Write to Aimee Look at aimee.look@wsj.com