April 18 (Bloomberg) -- Nestle SA, the world's largest food company, will probably report an increase in first-quarter revenue after raising prices by the most in a decade.

Sales rose 4.5 percent to 25.35 billion Swiss francs ($25 billion) from 24.25 billion francs a year earlier, according to the median estimate of seven analysts surveyed by Bloomberg News. The Vevey, Switzerland-based maker of Nescafe and Jenny Craig diet meals reports on April 21.

Nestle raised prices by 3 percent on average in 2007, the most since 1997, according to Roddy Child-Villiers, head of investor relations. Profit climbed 16 percent last year. Kraft Foods Inc., Nestle's nearest competitor, wasn't able to fully offset record commodity costs and posted a 15 percent drop in 2007 net income. The Swiss company succeeded in passing on costs because it's the biggest seller of coffee, dark chocolate and bottled water, analysts said.

``There can only be one market leader, and by being No. 1, you have more pricing power,'' said Guillaume Duchesne, a strategist at Fortis Private Banking, which owns Nestle stock.

Higher milk prices added 1 billion francs to Nestle's 2007 costs, and increases in the prices of coffee and cereal added 600 million francs, Nestle said in February.

Nestle spends 1.9 billion francs a year on research, more than the combined total for Kraft and Unilever, the maker of Knorr soups. The Swiss company revamps at least 20 percent of its 10,000 products every year to make them more appealing and to be able to charge higher prices.

Panini Lean Cuisine

Nestle last year introduced products including mesquite- seasoned chicken Panini Lean Cuisine and Nido Excella Gold, a probiotic milk for children aged 1 to 3.

The food company's shares gained 6 francs, or 1.2 percent, to 508.5 francs at 1:04 p.m. in Zurich. They have dropped 2.2 percent this year, less than the 4.7 percent decline in the Bloomberg Europe Food Index and the 14 percent drop in the Euro Stoxx 50 Index.

``Nestle is typically a much better investment than the market during a slump,'' said Patrik Schwendimann, an analyst at Zuercher Kantonalbank who rates the stock ``outperform.''

Nestle has about 30 brands that generate 1 billion francs of revenue a year. The fastest-growing, Nespresso coffee pods, inspired Nestle to introduce Dolce Gusto, a machine that makes espresso, hot chocolate and a variety of drinks.

Hot Pockets microwave sandwiches and Buitoni pasta were the worst performers among the company's so-called billionaire brands last year, with declining sales. Nestle has been advertising Hot Pockets with more meat, and Buitoni is focusing more on refrigerated, more-profitable fresh noodles.

Slowing Sales

``We don't go out and tell the people you have to pay more for the same product you bought yesterday,'' Chairman Peter Brabeck-Letmathe said in an April 1 speech. ``This would not be acceptable in today's world. What we are doing is renovating.''

To be sure, Nestle's pricing may be leading consumers to seek cheaper alternatives. First-quarter sales growth may have been the slowest in 11 quarters, according to the survey.

Brabeck told shareholders at the company's annual meeting last week that he's ``highly optimistic'' for the coming years. Sales will rise about 7 percent to 7.5 percent this year, excluding acquisitions, divestments and currency movements, beating Nestle's long-range targets for a fourth year. Chief Financial Officer Jim Singh has said Nestle's operating margin may improve by 0.3 percentage point this year.

Sales Targets

Nestle said March 13 it had an ``outstanding organic growth rate'' in January and February, helped by new price increases and a ``successful'' Easter season. Raw material costs will ``abate somewhat'' in the second half, Brabeck said at the time.

Nestle's target for this year beats those of Kraft and Unilever, though not Danone SA, which aims for annual sales growth, excluding acquisitions and currencies, of 8 percent to 10 percent. Kraft has said it plans for ``organic'' sales growth of at least 4 percent this year. Unilever expects underlying sales growth at the upper end of a 3 percent to 5 percent range.

Francois-Xavier Perroud, a Nestle spokesman, declined to comment on the consensus for sales.

Nestle is scheduled to release the results at 7:30 a.m. Zurich time. Following is a table of analysts' sales estimates.

               First-Quarter 2008    First-Quarter 2007
               Estimated             Reported

Revenue
Median         25.350                24.251
High           26.712
Low            25.157

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net.

Last Updated: April 18, 2008 07:06 EDT