Unilever and Nestlé, some of the world’s largest consumer companies, saw strong sales growth in the first three months of 2025 despite the looming threat of tariffs.
The rivals’ growth came from higher demand for some premium products and price hikes to offset soaring cocoa and coffee prices.
Unilever’s underlying sales were up 3% during the first quarter, with its personal care category bringing in the most business. The London-listed company’s so-called power brands, contributing to 75% of the group’s turnover, saw sales jump by 3%.
Unilever is in the middle of a shake-up that’s seen key leadership changes and an overhaul in its business focused on streamlining and gaining market share from rivals. During the pandemic, Unilever began to lose shoppers amid price increases to offset costs.
Earlier this month, the company ousted its CEO Hein Schumacher, and put CFO Fernando Fernandez in charge.
Fernandez has had a single resounding message since taking on the top job: to make big changes at the consumer brand behind Dove soap and Vaseline cream.
Fernandez said the company’s new direction would mean “a ruthless obsession with the consumer” during Thursday’s earnings call.
“We have a resilient portfolio, good momentum and, above all, a very clear sense of what we need to do,” the new CEO said.
Nestlé has faced similar struggles. The Swiss company behind KitKat and Nespresso also reacted to surging raw materials costs by jacking up the price tags on its products, which its chair, Paul Bulcke, said Nestlé “went a bit too far with.”
However, as demand for its coffee and confectionery, such as Smarties and Quality Street, boomed in the first quarter, the company reported a 2.8% organic revenue increase, beating analyst estimates of 2.6%.
“We are trying to take as much price as we can to cover our costs while being mindful of the consumer response in a competitive environment,” CEO Laurent Freixe said, Reuters reported. “Some political decisions, economic decisions taken have rather undermined already soft consumer confidence.”
Nestlé, too, is undergoing a shift in its business to focus on “billionaire brands,” or its strong-performing suite of brands that can become engines of growth. The Vevey-based company plans to slash $2.8 billion in costs by 2027.
Consumer companies like Unilever and Nestlé constantly jostle over pricing to deliver strong top-line figures without upsetting shoppers. The subject became sensitive in the economic aftermath of the pandemic when cash-strapped consumers alienated big brands amid high inflation in favor of the best deals.
Tariff talk in the U.S. threatens to bring some of those pressures back, as experts worry about the medium-term impact of additional levies on broader consumer sentiment. This is set against the backdrop of eye-popping cocoa and coffee prices, the key ingredients in some of Unilever’s and Nestlé’s top products.
Given that their products are sold worldwide, Unilever and Nestlé have expansive manufacturing presences across regions. Nestlé, for instance, makes roughly 90% of its U.S. products within the country, shielding it from the worst impact of tariffs.
However, the companies also count the U.S. as their biggest market in most product categories, making demand from the country critical to their financial health.
How consumers cope with a changing global order will determine demand for the consumer goods the two companies make. Unilever noted “declining consumer sentiment,” while Nestlé said political and economic decisions dented “already soft consumer confidence.”
On Wednesday, British consumer company Reckitt Benckiser, which makes Dettol cleaning liquids and Strepsils lozenges, also warned of wavering consumer confidence. These challenges could determine demand in the competitive market for consumer goods through 2025.
“While the full picture on tariffs is still unfolding, our analysis suggests that, at this stage, the direct impact on our business will be limited,” Fernandez said.
Meanwhile, Nestlé’s CFO Anna Manz warned that tariffs may hurt select parts of its business, such as bottled water and Nespresso capsules. The Swiss giant said it would cut prices by 1% in the U.S. to maintain its appeal with American shoppers.
While Nestlé and Unilever’s size and scale provide ample cushioning, they’ll still have to watch for private labels offering the same products at lower prices.
“The number of retailers that have developed the capabilities of the multinational consumer companies has increased quite significantly,” Aftab Hussain, managing director and senior partner in BCG’s consumer and retail team, told Reuters. “You’re seeing innovations come through from retailers on private brands that’s actually ahead of the (bigger) brands.”
This story was originally featured on Fortune.com
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