Milk, cereal prices to add to Nestle’s woes with coffee, cocoa prices already at record highs

The price increase in these commodities will add to the major headwinds facing the company on account of record high prices of commodities like coffee and cocoa.

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26 Aug, 2025 12:21

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FMCG major Nestle India on Thursday (April 25) said that it expects headwinds in the near term on account of an expected rise in cereal, grain, and milk prices.

The hike in prices of these commodities will be along with the  record high prices of commodities like coffee and cocoa that the company is seeing.

The company noted that cereals and grains are experiencing a price spike due to a rise in minimum support prices (MSP).

Milk prices are expected to increase due to the severe summer conditions that have been forecast. The company is an important player, with established brands like Milkmaid.

Read more: Nestle India net profit rises 27% to Rs 934 cr in March qtr, declares Rs 8.5 dividend

Meteorologists predict that India will have a brief spring followed by a harsh summer this year. El Niño conditions are expected to shift to neutral by June, leading to La Niña by September. The India Meteorological Department forecasts a transition to neutral conditions by April-June (73 percent likelihood), followed by a move to La Niña around July-September 2024, according to most models.

The company added that coffee and cocoa prices have reached all-time highs amid an ongoing price rally. Nestle is a major player in coffee and cocoa with brands like Nescafe and Kit-Kat.

Recently, the price of dried cocoa beans reached a record high. This trend stems from small West African farms,  and is influenced by climate change, and complexities in the futures market. Such surges, partly fuelled by financial instability caused by rapid input cost increases, can overpower strategies designed to manage such fluctuations.

Read more: Nestle to bring Nespresso brand of coffee and machines to India as demand grows

In coffee, Arabica prices kept rising during the quarter due to tight global supplies, while Robusta prices reached all-time highs. In Q4, Robusta prices were up 60 percent on average compared to the previous year.

Nestle India’s domestic sales crossed Rs 5,000 crore this quarter.

“I am pleased to share that we have delivered double-digit growth, despite challenges posed by rising food inflation and volatile commodity prices. We have witnessed a strong growth momentum across our product portfolio, led by a combination of pricing and product mix,” said Suresh Narayanan, Chairman and Managing Director, Nestlé India.

The company reported a standalone net profit of Rs 934 crore in the March quarter, up 27 percent from Rs 737 crore a year ago. Revenues rose 9 percent to Rs 5,268 crore, the FMCG major said in a regulatory filing on April 25.