Nestlé’s buoyant sales in e-commerce sales, convenience foods and health ingredients contributed to organic growth of 3.5 percent in the first nine-months of this year. Total reported sales decreased by 9.4 percent to CHF 61.9 billion (US$68.4 billion), reports the Swiss food giant.
“Strong organic growth was broad-based and supported by sustained momentum in the Americas, Purina PetCare and Nestlé Health Science, as well as the acceleration of our coffee business in the third quarter,” highlights Mark Schneider, CEO.
“We continue to develop our portfolio with speed and discipline. As an example, we are transforming Nestlé Health Science into a nutrition and health powerhouse through a combination of strong organic growth and targeted acquisitions,” he adds.
“The recent additions of Zenpep, Vital Proteins and Aimmune Therapeutics are further steps in the expansion of our nutritional health offerings.”
As a knock-on effect of COVID-19, the multinational saw bolstered demand in e-commerce consumption. Online sales hit growth of 47.6 percent, accounting for 12.3 percent of total group sales.
While demand for health products was boosted by COVID-19, confectionery and water categories posted sales decreases, reflecting reduced out-of-home purchases and on-the-go consumption.
Pet care boom and dairy growth
By product category, the largest contributor to Nestlé’s growth was Purina PetCare and its premium brands Purina Pro Plan, Purina ONE and Felix.
The company’s dairy category grew at a high single-digit rate, based on increased demand for fortified milks and home-baking products.
Coffee posted mid single-digit growth, fueled by strong consumer demand for Starbucks products, Nespresso and Nescafé. Prepared dishes and cooking aids reached mid single-digit growth.
Vegetarian and plant-based food products delivered strong double-digit growth, supported by new product launches and continued distribution expansion.
Nestlé Health Science posted double-digit growth, reflecting increased consumer demand for products that support health and the immune system.
Meanwhile, confectionery and water categories reported a sales decrease due to their high exposure to out-of-home channels, with some improvement in the third quarter.
Portfolio management
Nestlé details that its strategic reviews for parts of the Waters business in North America, the Yinlu peanut milk and canned rice porridge businesses in China are fully on track. Both reviews are expected to be completed in early 2021.
In other notable highlights, Nestlé completed the acquisition of a majority stake in collagen products brand Vital Proteins, in July. In September, Nestlé closed the acquisition of IM HealthScience, which specializes in medical foods and dietary supplements.
Divestitures decreased sales by 5.5 percent, largely related to the divestment of the company's US ice cream business.
Regional performance
Nestlé’s performance in North America maintained a mid single-digit growth rate, with strong real internal growth (RIG) in most product categories. As the largest growth contributor, Purina PetCare sustained momentum in e-commerce and premium brands.
Latin America reached high single-digit growth, with broad-based contributions across geographies and most product categories. Most brands contributed strongly, particularly Ninho, NAN and Nescafé. Notably, Brazil saw double-digit growth.
China saw negative growth, turning positive in the third quarter. Coffee, culinary and ice cream all delivered positive growth, with sequential quarterly improvements.
Japan saw a decline in sales, with some improvement in the third quarter. KitKat sales declined in Japan, impacted by a reduction of inbound tourists.
In Southeast Asia, sales in the Philippines grew at a double-digit rate, with elevated consumer demand for Bear Brand, Milo and Maggi. Indonesia delivered high single-digit growth, led by Bear Brand, Dancow and Milo.
South Asia continued to perform well. India posted strong mid single-digit growth, with good momentum in Maggi, Nescafé and KitKat.
Sub-Saharan Africa grew at a double-digit rate, with strong growth across most markets. Meanwhile, Oceania reported strong growth across most product categories, particularly in coffee and confectionery.
