Analysis
Nestlé was significantly affected by U.S. tariffs introduced in early 2025, which contributed to a total headwind of 300 basis points for the group during the fiscal year. The specific net impact of tariffs on the underlying trading operating profit (UTOP) margin was estimated at a couple of tens of basis points (approximately 20–30 bps) for the full year 2025. This impact was more pronounced in the second half of the year as short-term mitigation efforts from the first half were lapped and commodity cost phasing began to flow through the P&L.
The company's coffee and confectionery businesses were the primary areas of exposure. Specifically, imported products such as Nespresso and certain soluble coffee lines were impacted. Nestlé managed these headwinds through a combination of pricing actions and supply chain adjustments. In the first half of 2025, Nespresso prices were increased by 3.2% to address inflation and tariff costs, although this led to short-term volume (RIG) elasticities in certain markets.
Nestlé's mitigation strategy relies heavily on its extensive local manufacturing footprint; approximately 90% of the products the company sells in the U.S. are manufactured within the country, which shields the majority of its portfolio from direct import levies. Other mitigating actions include "load balancing" in sourcing and the implementation of the "Fuel for Growth" efficiency program, which over-delivered CHF 1.1 billion in savings during 2025 to help offset the broader 300 bps headwind from tariffs, input costs, and foreign exchange.
Looking ahead to 2026, Nestlé expects tariffs to remain a disproportionate headwind in the first half of the year as the company compares against the pre-tariff period of early 2025. Management has integrated its Nutrition and Health Science businesses to further drive synergies and scale, which is intended to help maintain its UTOP margin guidance of at or above 16.0% despite the ongoing impact of these trade measures.
Data
($M, except margin bps)
| Metric | FY2025A |
|---|---|
| Total Headwinds (Input Costs, FX, Tariffs) | 300 bps |
| Net Tariff Impact on UTOP Margin | 20 – 30 bps |
| Estimated Net Tariff Cost (CHF) | 176 – 264 |
| Underlying Trading Operating Profit (UTOP) Margin | 16.1% |
| FY2025 Reported Sales (CHF) | $88.0B |
Source: Transcript FY-2025, Transcript H1-2025, Marvin Labs
Financial Impact
- Cost Impact (Historic): CHF176M–CHF264M
- Cost Impact (Forward-Looking): CHF176M–CHF264M
Sources
The tariffs impact for Nestlé for the full year 2025 is expected to be a couple of tens of basis points for the group.
The second half decline is a consequence of the gross margin dynamic, along with an increased impact from FX and tariffs.
The other thing to have in mind is tariffs, 'cause there are still tariffs enacted. So that, from a cost perspective, will disproportionately impact the first half [of 2026], 'cause we're lapping a period where there were no tariffs in the prior year.