Finimize newsletter 2021-10-20

The Swiss food giant Nestlé reported better-than-expected earnings on Wednesday

Nestlé has earned plenty of new fans this year: coffee addicts have been jonesing for their fix of the company’s partnership with Starbucks, while lockdown’s newest pet-owners have been stocking up on its pet food. That might be why the company’s organic revenue – which excludes the effects of acquisitions and currency swings – climbed by a better-than-expected 8% over the first nine months of 2021 versus the same time last year. Nestlé has a good feeling about 2021 as a whole too: it’s expecting this year’s sales to grow at their fastest rate in a decade, and upped its full-year revenue outlook accordingly.

For markets: Nestlé can charge what it likes.

Nestlé sells products that people tend to buy no matter what, which comes in handy in times of shortage-driven price rises: it can pass the extra expenses onto its customers in the form of higher prices without losing them to rivals. The fact that it upped prices by 2% last quarter and still posted better-than-expected revenue, then, looks like it might’ve impressed investors: they sent its stock up 3% after the announcement.

For you personally: Consumer staples are having a moment.

It’s not just Nestlé’s customers paying more: inflation has been spiking all over the world, with data out on Wednesday showing that UK prices were up 3.1% last month from the same time last year. Economists reckon they’ll stay high for most of next year too, especially given rising food and energy costs. And if that’s the case, stocks of consumer staples like Nestlé that can pass on costs and protect their bottom line stand to keep performing well.