Global food industry response to rising costs

The global food industry is responding to rising production and raw material costs through various structural and product-level changes. A shift in consumer demand toward entry-level and mid-segment products has been observed as middle-income purchasing power declines, leading supermarket chains to narrow their product ranges.

In response to inflationary pressures, manufacturers are increasingly adopting a practice known as ‘alteraflação’, where recipes are modified to substitute high-quality ingredients with cheaper alternatives, such as replacing milk or cocoa with vegetable oils and artificial flavorings. Nestlé CEO Philipp Navratil noted that the company is reformulating products and increasing prices to mitigate costs related to energy, freight, and raw materials, citing the impact of Middle East conflicts on global supply chains.

Regional impacts vary, with Turkish producers facing stagnation due to rising input costs and exchange rate fluctuations. Specifically, domestic increases in animal feed and raw materials like barley and corn are expected to impact livestock and dairy production budgets.