Nestlé has said it needs to slow the pace of its price increases amid signs that consumers are switching brands in favour of cheaper alternatives.

The maker of household brands from KitKat to Cheerios said it had therefore lowered its forecast for sales growth this year.

The Swiss consumer goods giant said it had seen a “faster than expected price decline” in the first six months of 2024.

While Nestlé continues to raise its prices, this suggests that the company has had to scale back its price increases in response to consumer pressure.

Nevertheless, prices for all brands rose by 2% worldwide between January and June compared to the same period last year.

But over the last three months, price increases have slowed to 0.6 percent in response to the market.

This is well below the global price increase of 7.5% in 2023.

The company said it had been “prudent” to adjust its full-year outlook, now forecasting revenue growth of at least 3%, up from around 4% previously.

Coffee brands were the biggest driver of organic sales growth in the last period, led by top brands Nescafe, Nespresso and Starbucks.

In addition, the company continued to enjoy strong sales of its chocolate products such as KitKat, Smarties and Quality Street, as well as its premium pet care brands, including Purina.

On the other hand, it said demand for its frozen food division remained under pressure as consumer demand continued to weaken and the company faced competition from cheaper alternatives.

Nestlé’s frozen food brands include DiGiorno pizza, Stouffer’s frozen meals and Hot Pockets sandwiches.

The company generated total revenue of 45 billion Swiss francs (40 billion pounds), a decline of 2.7 percent from the same period last year when revenue was 46.3 billion Swiss francs (41 billion pounds).

However, the company has seen a return to volume growth, meaning that both the total number of products sold and their value have increased.

Nestlé CEO Mark Schneider said the company aims to continue driving sales growth by “bringing innovations to market that address consumer trends and expanding our great iconic brands.”

Analysts said major food and beverage companies such as Nestlé were facing a “reality check” as the benefits of higher prices were fading.

Chris Beckett, head of equity research at Quilter Cheviot, said: “With input costs falling and inflation back in line with central bank targets, consumers are now less willing to accept large price increases.”

He said Nestlé was successful where shoppers preferred “quality items,” such as confectionery, coffee and pet products.

However, the company has encountered greater difficulties in areas where prices for its products have fallen significantly since their peaks two years ago, he said.