Unilever and Danone win back shoppers as price hikes slow

LONDON/PARIS, Oct 24 (Reuters): Consumer goods groups Unilever and Danone beat third-quarter sales estimates on Thursday as they slowed price hikes and invested in innovations to win back shoppers who had turned to cheaper brands during a surge in inflation.

The cost of everything from freight to raw materials rose during the pandemic, while grain and energy became more expensive after Russia's full-scale invasion of Ukraine in 2022. The packaged food industry, including Unilever and Danone, raised prices to protect margins.

At their peak in the fourth quarter of 2022, Unilever's underlying prices rose 13.3 per cent, with prices at its home care business up nearly 17 per cent and those at its ice cream business about 14 per cent higher.

In stark contrast, Unilever on Thursday reported underlying third-quarter price growth of 0.9 per cent, with underlying volumes up 3.5 per cent, the biggest increase since the first quarter of 2021. Analysts had expected a 1 per cent increase in prices and a 3.2 per cent rise in volumes.

"We have delivered a fourth consecutive quarter of positive, improved volume growth, with each of our business groups driving higher volumes year-on-year," CEO Hein Schumacher said in a statement, adding that Dove soap, Comfort fabric conditioner and Magnum ice creams had performed well.

Meanwhile, France's Danone also beat third-quarter sales expectations, boosted by a 3.6 per cent rise in sales volumes as price hikes slowed to 0.7 per cent, reflecting strong demand in North America for high-protein products, coffee creamers and waters.

Both Unilever and Danone kept their forecasts for 2024.