Nestlé and Rivals Ease U.S. Price Hikes as Shoppers Turn to Cheaper Alternatives

Major global consumer goods companies, including Nestlé and Unilever, are slowing down price increases in the United States to avoid losing market share to more affordable private-label brands, as rising tariffs and economic uncertainty strain American household budgets.

Nestlé, the world’s largest food and beverage company and maker of Nescafé and KitKat, announced it had cut prices by 1% in its largest market — the U.S. — citing weakened consumer confidence. “Political and economic decisions have undermined already soft consumer sentiment,” said Laurent Freixe, Nestlé CEO, during an earnings call on Thursday.

Unilever, the producer of Dove soap and Ben & Jerry’s ice cream, also reported restrained price increases in North America — raising prices by just 2.1%, compared to more aggressive hikes in other regions.

Retailers like Walmart and Target are rapidly expanding their private-label offerings, which are generally priced lower than national brands. According to data from NielsenIQ, prices for private-label products rose by around 4% in Q1 2025, compared to just 2% for big-brand goods — yet private labels remained at least $1 cheaper on average across categories such as coffee, soap, and baby food.

This shift is worrying investors, as private-label brands are now growing four times faster than their branded counterparts in the U.S., according to consulting firm McKinsey. A recent survey found that 60% of consumers plan to adjust their shopping habits by switching to cheaper products or shopping at wholesale clubs and online retailers.

“There’s a large percentage of people who will just move to private label,” said Rob Holston, Global Consumer Products Leader at EY. “Many of our clients say they’re on a ‘war-footing’ with private brands now.”

Adding to the pressure, recent tariff increases imposed by President Donald Trump on several trading partners have raised concerns about a potential recession. Rising commodity prices and utility costs are further squeezing household spending.

Trump met with executives from Walmart and Target earlier this week to discuss the impact of tariffs on their imports, while analysts warned that the pricing power of big brands may be approaching its limit.

Consumer goods giants have responded cautiously. Reckitt, the maker of Durex condoms, increased prices by just 0.9% in North America in Q1, compared to 3% in Europe and 3.9% in emerging markets.

Despite their global scale, Nestlé and Unilever are seeing continued market share losses in the U.S.. Nestlé has seen declining store share for 18 consecutive quarters, particularly in frozen foods and coffee creamers. Unilever has similarly lost share in all but two of those quarters, according to data analyzed by Barclays.

Retailers are also stepping up innovation, with some private brands outperforming major labels in product development. “Retailers are now matching or even surpassing multinationals in terms of brand capabilities,” said Aftab Hussain, senior partner at BCG.

As pricing wars intensify and consumer loyalty wanes, companies like Nestlé and Unilever face growing challenges to defend their U.S. market presence. “There are fewer and fewer hiding places for investors,” said Tom Lemaigre, portfolio manager at Janus Henderson. “Consumer companies need to rethink their strategies to keep up.”