Nestle logos are pictured in the supermarket of Nestle headquarters in Vevey, Switzerland, February 13, 2020.
Credit: Reuters File Photo
Bengaluru: Nestle India reported a smaller-than-expected rise in its first-quarter profit on Thursday as price hikes drove shoppers towards cheaper rivals, hurting the consumer giant's sales volumes.
The Indian arm of the Swiss food giant Nestle reported a net profit of Rs 747 crore for the three-month period ended June, missing analysts' estimate of Rs 816 crore, as per LSEG data.
Over the last few years, Nestle India and other consumer good giants have raised prices of their chocolates and milk products to offset the surge in cost of raw materials, including cocoa and milk.
However, that caused consumers to switch to cheaper unbranded products, not only eroding market shares but forcing the larger players to spend more on advertising to lure shoppers back.
Nestle India, whose products range from Maggi instant noodles to Kit Kat chocolates and Nescafe beverages, said its revenue from operations rose 3.3 per cent to Rs 4,814 crore in the quarter, but missed analysts' estimate of Rs 5,056 crore.
Earlier in the day, parent company Nestle reported half-year sales growth below analysts' forecast and also lowered its full-year organic sales growth outlook to at least 3 per cent from about 4 per cent previously.
Shares of Nestle India fell further after the results to trade 1.1 per cent lower.