In the aftermath of the prices of the “liberation days” of American president Donald Trump, consumer goods companies were divided on the severity of the impact. Some have torn their financial forecasts, while others have said to analysts and investors in recent weeks, they could resist the storm.
However, companies that produce everything, PlayStation consoles to mayonnaise and detergent to detergent for the Western world, have largely agreed with one thing: Trump prices mean that consumer prices will have to increase.
But the problem for Procter & Gamble, Nestlé, Unilever and the other giants of the consumer goods industry is that after three years of heavy inflation, and with the confidence of consumers in the United States at its lowest level since 2020, buyers may not be willing to bear.
“The consumer is tired,” said Rob Holston, head of EY global consumer products. “They don't only see the price of Cornflakes increasing, it is also their life has become more complex … The uncertainty of job losses, recession and how long will all last.”
After unveiling high prices on American trade partners on April 2, Trump later announced a 90 -day break to allow new commercial offers in the place. A Basic price of 10% On the majority of imports, it remains in place, apart from those of China, which are subject to a prohibitive rate of 145%.
Consequently, companies Going from adidas The luxury group, Hermé and Sony have all warned that American consumers will pay higher prices.
Seven major luxury brands have increased prices worldwide in April, according to Citi analysts. Dior and Louis Vuitton, both held by LVMH, increased the prices by 4 and 5% respectively on a selection of products followed by the bank, while the jeweler belonging to Richemont, Van Cleef & Arpels, increased prices by 5% on almost its entire range.
Producers of household items – including Colgate -Palmolive, Nestlé and Unilever – also indicated that they would increase their prices to compensate for the impact of prices.
Rich Shepherd, analyst at Mintl, said the price increases would probably be more steep for American consumers than those from other countries.
“What people have to face is really difficult in terms of price increases,” said Shepherd, who added that consumers have gotten used to a “constant whirlwind of uncertainty”.
“There can happen a point where … People reach a breakdown (on price increases), but at the minute, at least, it's just the next thing (they) think,” he said.
Consumer goods companies are locked in negotiations with retailers on both sides of the Atlantic, and there are signs that winning their price increases is difficult.
A framework for a large British supermarket said that it “called bullshit” on companies trying to make price increases under the cover of prices. Trump's break on most prices means that the only significant increase in tasks, for the moment, is on expeditions between the United States and China.
“You can source almost all the ingredients in countries outside the United States, except the nuts,” said the executive. “The suppliers are pressure for price increases and we say to them:” Listen, you have to be careful here, otherwise you will kill the golden goose. “Consumers cannot take much more.”
Tensions were raised between supermarkets and suppliers even before Trump's prices. Heineken financial director Harold Van Den Broek told analysts last month that some European supermarkets even demanded that their reduction prices, in part because increases in recent years jumped the demand of beer consumers.
“We are in difficult negotiations because we do not think (price reductions) fully justified,” said Van Den Broek.
There are few signs of improving consumer demand either. WK Kellogg, the American producer of breakfast cereals, said this week that sales volumes dropped by 8.6% in the first quarter, as it increased prices by 3%.
The Crocs foam shoe company pulled financial advice on Thursday, citing the “potential for darker consumers” due to prices. “We expect the industry to increase in terms of price,” general director Andrew Rees told analysts.
Top American retailer Walmart, which plans to keep prices On certain products to win a market share, should publish the profit next week.
Michael Waterson, professor of economics at the University of Warwick, said that multinationals with ranges of wide products, such as Unilever or Nestlé, have “significant latitude” as to their transmission on any cost increase.
He added that one of the key factors stimulating this decision would probably be the extent to which demand is weakening when prices are increasing through the company's product portfolio.
“It is logical economic logic to climb the prices of charges more in the areas where demand will reduce less,” said Waterson.
According to EY’s annual consumer survey of 20,000 people in 26 countries, which was published in March, buyers said they were most likely to reduce spending on snacks and confectionery, alcohol, restoration and take -out food. They were less likely to reduce purchases of fresh food, household care products, clothing and shoes.
Claus Niegsch, analyst in Dz Bank, said that if many consumer goods were likely to become more expensive in the United States, this may not be the case in Europe.
Niegsch said that the goods that were originally intended for the American market would be diverted to other markets at Knockdown prices to avoid prices – limiting the capacity of companies in these markets to increase prices.
In April, the first month since Trump launched his last trade war, Chinese exports For the United States, fell 21% compared to last year. Exports to Europe increased by 8%.
Niegsch said: “The concern about the increase in import prices can be premature.”
Additional report by Gregory Meyer in New York and Florian Müller in Francfurt
