KUALA LUMPUR: Nestle (Malaysia) Bhd may raise the prices of certain products containing coffee and cocoa beans in response to the increasing prices of the two commodities.
Chief executive officer Juan Aranols, in acknowledging the inherent volatility of the commodity market, emphasised Nestle Malaysia's ongoing vigilance when contemplating the price adjustments.
"While we will not fully pass on the impact of costs, there may be a slight price increase in one or two products over the next few months," he said during the launch of its "Salary For Life" 2024 contest, here, yesterday.
Global cocoa and coffee prices are surging as severe weather events hamper production in key regions.
In West Africa, where about 70 per cent of global cocoa is produced, Ivory Coast and Ghana reportedly are facing catastrophic harvests this season as the El Nino weather phenomenon resulted in unseasonal heavy rainfalls followed by strong heat waves.
The International Cocoa Organisation, in its latest monthly data, expects a supply deficit of 374,000 tonnes for the 2023/2024 crop year (ending Sept 30), compared with a deficit of 74,000 tonnes in the previous corresponding period.
Cocoa production is expected to drop 10.9 per cent year-on-year to 4.45 million tonnes for the current crop year.
MARC Ratings said recently while cocoa bean price was projected to trend downwards over the near term from the peak of US$10,080 per tonne on March 26, it was expected to hover at an elevated level, higher than the US$3,000 per tonne prior to the commencement of the price escalation.
As for coffee bean prices, both cheaper robusta and higher-end arabica beans reportedly have rallied sharply since the start of the year.
London robusta futures, the global benchmark, hit US$3,948 per tonne nearly a fortnight ago, a record since the contract started trading more than 16 years ago.
Arabica futures in New York rose to US$2.34 a pound, the highest level since September 2022.
Aranols said Nestle Malaysia adopted a discerning approach to price adjustments, without specifying the particular products affected.
"We are following the situation of the commodity market, and clearly the volatility internationally is very high and for us, we always consider pricing the last resort action that we take.
"We look first at other possible measures, especially savings and efficiency. But given the price of cocoa, for instance, has more than doubled in the last few months and continues to be at an incredibly high level, there will be some impact in terms of pricing."
On sugar, Aranols said Nestle Malaysia adhered strictly to the most stringent regulations, both internationally and locally.
"We follow the World Health Organisation indications and we follow all the Malaysian local regulations. If you examine the sugar content of our product, you will find it well within acceptable limits. In our case, it originates from natural sources.
"The primary sugar sources in Cerelac are milk and cereal, both natural and high-quality ingredients used in the manufacturing process."
When asked about the boycott situation in Malaysia, Aranols said despite calls to boycott Nestle products, many Malaysians continued to purchase them.
"We maintain a singular focus on our mission, which is to deliver exceptional products of the highest quality, increasingly crafted with Malaysian ingredients, produced in Malaysian factories by our dedicated Malaysian employees.
"We are unwavering in this commitment, and initiatives like (the 'Salary for Life') campaign also provide us with an opportunity to express gratitude to Malaysians for their trust and to contribute to deserving charities that provide crucial support to those in need," he added.