Nestlé's First Quarter 2024 recorded a modest organic growth of 1.4%
Source: The DairyNews
Nestlé, the global food and beverage powerhouse, has released its sales figures for the first quarter of 2024, offering valuable insights into its performance and future prospects.
Key Highlights:
CEO Perspective:
Mark Schneider, Nestlé's CEO, expressed confidence in the company's ability to navigate challenges and capitalize on growth opportunities. He highlighted strategic efforts in innovation, particularly in North America's frozen food segment, and reiterated Nestlé's commitment to delivering shareholder value.
With a robust outlook for the remainder of 2024, Nestlé aims to deliver sustainable growth and value creation for its stakeholders.
Zone North America
Organic growth was -2.5%. Pricing moderated to 3.3%, following a high base of comparison in 2023. RIG was -5.8%, primarily driven by a decline in frozen food. Foreign exchange had a negative impact of 5.3%. Reported sales in Zone North America decreased by 7.7% to CHF 5.8 billion. The Zone saw market share gains in Purina PetCare and Coffee, with losses in frozen pizza and coffee creamers.
Water sales grew at a mid single-digit rate, with strong momentum for S.Pellegrino and Acqua Panna. The beverages category posted a sales decrease, as robust growth for Starbucks, Nescafé and Seattle’s Best was more than offset by negative growth for Coffee mate with a high base of comparison in the prior year. Infant Nutrition saw a sales decrease, as strong growth for Nido growing up milks was more than offset by declines for Gerber baby food. Growth in frozen food was negative, reflecting soft consumer demand for the category and intense price competition, particularly in frozen pizza and snacks, as well as the winding down of the frozen meals business in Canada, which is near completion.
Zone Europe
Organic growth was 4.4%, with pricing of 4.6% and RIG of -0.2%. Foreign exchange negatively impacted sales by 5.8%. Net divestitures reduced sales by 3.6%. Reported sales in Zone Europe decreased by 5.0% to CHF 4.6 billion. Growth was broad-based across geographies and categories. The Zone saw market share gains in pet food and Infant Nutrition, with slowing market share losses in water.
By product category, the key contributor to growth was Purina PetCare, driven by premium brands Purina One, Felix and Gourmet. Sales in Coffee grew at a mid single-digit rate, with strong contributions by Nescafé and Starbucks products. Confectionery saw mid single-digit growth, with strong demand for KitKat and seasonal products. In January, the Zone launched KitKat Breaks for Good, the first chocolate bar made with cocoa sourced from farming families supported by Nestlé’s income accelerator program. Water recorded mid single-digit growth, underpinned by a sales rebound for Perrier. Culinary sales grew at a low single-digit rate, led by Maggi, which expanded distribution for its noodles portfolio. Infant Nutrition saw low single-digit growth, following a high base of comparison in 2023.
Zone Asia, Oceania and Africa (AOA)
Organic growth was 3.6%, with pricing of 4.1% and RIG of -0.4%. Foreign exchange reduced sales by 13.0%, impacted by significant currency depreciation. As a result, reported sales in Zone AOA decreased by 9.4% to CHF 4.2 billion. By geography, the key growth drivers were Central and West Africa, India and the Philippines. In these markets, affordable offerings fueled growth, led by Maggi, Lactogen and Nescafé. The Zone saw market share gains in confectionery, coffee and pet food, with losses in dairy.
By product category, Infant Nutrition was the largest growth contributor, led by NAN and Lactogen. Culinary achieved high single-digit growth, fueled by distribution expansion and innovation for Maggi across product segments. Coffee delivered mid single-digit growth, with continued robust demand for Nescafé. Sales in Nestlé Professional grew at a high single-digit rate across geographies and categories, fueled by distribution expansion. Confectionery reported low single-digit growth, with strong momentum for KitKat. Dairy posted close to flat growth.
Zone Latin America
Organic growth was 3.1%, with pricing of 3.9% and RIG of -0.8%. Foreign exchange had a negative impact of 1.5%. Net divestitures decreased sales by 0.1%. On March 1st 2024, the Group completed the acquisition of a majority stake in Grupo CRM, a premium chocolate player in Brazil. Reported sales in Zone Latin America increased by 1.5% to CHF 3.1 billion. Growth was led by Brazil, with continued momentum for Garoto, KitKat and Nescafé. Mexico delivered low single-digit growth, based on strong sales momentum for Purina PetCare, La Lechera and Carlos V. The Zone achieved market share gains in pet food, Infant Nutrition, and portioned coffee, with losses in dairy, following portfolio optimization.
Zone Greater China
Organic growth was 3.7%, with pricing of 1.5% and RIG of 2.1%. Foreign exchange had a negative impact of 9.8%. Reported sales in Zone Greater China decreased by 5.9% to CHF 1.2 billion. Growth was driven by continued momentum in out-of-home and e-commerce channels. The Zone saw market share gains in soluble coffee, confectionery, and pet food, with losses for Wyeth infant nutrition products.
By product category, confectionery was the largest growth contributor, led by Hsu Fu Chi and Shark Wafer. Nestlé Professional achieved double-digit growth, fueled by innovation and customer acquisition. Coffee delivered mid-single digit growth, driven by Nescafé ready-to-drink offerings. Sales for Purina PetCare grew at a double-digit rate, based on new product launches and strong e-commerce momentum, particularly for Pro Plan and Fancy Feast. Infant Nutrition saw positive growth, with continued strong demand for NAN, which more than offset a sales decline for Wyeth products. Culinary posted slightly negative growth, as positive sales trends in out-of-home channels were more than offset by a decrease in retail sales.
- Organic Growth: Nestlé recorded a modest organic growth of 1.4%, driven primarily by strong performance in Europe and emerging markets. However, this growth was partially offset by challenges in North America.
- Sales Figures: Total reported sales amounted to CHF 22.1 billion, reflecting a decrease of 5.9% compared to the same period last year. Foreign exchange fluctuations and net divestitures contributed to this decline.
- Geographical Performance: While Europe and emerging markets showed resilience, North America experienced a decline in sales. The company remains optimistic about a rebound in North American sales in the upcoming quarters.
- Product Categories: Purina PetCare emerged as a key contributor to organic growth, along with positive performances from Coffee, Confectionery, Water, and Infant Nutrition. However, challenges were observed in segments such as Nestlé Health Science and Dairy.
- Strategic Initiatives: Nestlé is focused on executing growth initiatives across its portfolio, emphasizing innovation, and leveraging its expertise in science and nutrition. The company remains committed to its 2024 outlook, expecting organic sales growth of around 4%.
CEO Perspective:
Mark Schneider, Nestlé's CEO, expressed confidence in the company's ability to navigate challenges and capitalize on growth opportunities. He highlighted strategic efforts in innovation, particularly in North America's frozen food segment, and reiterated Nestlé's commitment to delivering shareholder value.
With a robust outlook for the remainder of 2024, Nestlé aims to deliver sustainable growth and value creation for its stakeholders.
Zone North America
Organic growth was -2.5%. Pricing moderated to 3.3%, following a high base of comparison in 2023. RIG was -5.8%, primarily driven by a decline in frozen food. Foreign exchange had a negative impact of 5.3%. Reported sales in Zone North America decreased by 7.7% to CHF 5.8 billion. The Zone saw market share gains in Purina PetCare and Coffee, with losses in frozen pizza and coffee creamers.
Water sales grew at a mid single-digit rate, with strong momentum for S.Pellegrino and Acqua Panna. The beverages category posted a sales decrease, as robust growth for Starbucks, Nescafé and Seattle’s Best was more than offset by negative growth for Coffee mate with a high base of comparison in the prior year. Infant Nutrition saw a sales decrease, as strong growth for Nido growing up milks was more than offset by declines for Gerber baby food. Growth in frozen food was negative, reflecting soft consumer demand for the category and intense price competition, particularly in frozen pizza and snacks, as well as the winding down of the frozen meals business in Canada, which is near completion.
Zone Europe
Organic growth was 4.4%, with pricing of 4.6% and RIG of -0.2%. Foreign exchange negatively impacted sales by 5.8%. Net divestitures reduced sales by 3.6%. Reported sales in Zone Europe decreased by 5.0% to CHF 4.6 billion. Growth was broad-based across geographies and categories. The Zone saw market share gains in pet food and Infant Nutrition, with slowing market share losses in water.
By product category, the key contributor to growth was Purina PetCare, driven by premium brands Purina One, Felix and Gourmet. Sales in Coffee grew at a mid single-digit rate, with strong contributions by Nescafé and Starbucks products. Confectionery saw mid single-digit growth, with strong demand for KitKat and seasonal products. In January, the Zone launched KitKat Breaks for Good, the first chocolate bar made with cocoa sourced from farming families supported by Nestlé’s income accelerator program. Water recorded mid single-digit growth, underpinned by a sales rebound for Perrier. Culinary sales grew at a low single-digit rate, led by Maggi, which expanded distribution for its noodles portfolio. Infant Nutrition saw low single-digit growth, following a high base of comparison in 2023.
Zone Asia, Oceania and Africa (AOA)
Organic growth was 3.6%, with pricing of 4.1% and RIG of -0.4%. Foreign exchange reduced sales by 13.0%, impacted by significant currency depreciation. As a result, reported sales in Zone AOA decreased by 9.4% to CHF 4.2 billion. By geography, the key growth drivers were Central and West Africa, India and the Philippines. In these markets, affordable offerings fueled growth, led by Maggi, Lactogen and Nescafé. The Zone saw market share gains in confectionery, coffee and pet food, with losses in dairy.
By product category, Infant Nutrition was the largest growth contributor, led by NAN and Lactogen. Culinary achieved high single-digit growth, fueled by distribution expansion and innovation for Maggi across product segments. Coffee delivered mid single-digit growth, with continued robust demand for Nescafé. Sales in Nestlé Professional grew at a high single-digit rate across geographies and categories, fueled by distribution expansion. Confectionery reported low single-digit growth, with strong momentum for KitKat. Dairy posted close to flat growth.
Zone Latin America
Organic growth was 3.1%, with pricing of 3.9% and RIG of -0.8%. Foreign exchange had a negative impact of 1.5%. Net divestitures decreased sales by 0.1%. On March 1st 2024, the Group completed the acquisition of a majority stake in Grupo CRM, a premium chocolate player in Brazil. Reported sales in Zone Latin America increased by 1.5% to CHF 3.1 billion. Growth was led by Brazil, with continued momentum for Garoto, KitKat and Nescafé. Mexico delivered low single-digit growth, based on strong sales momentum for Purina PetCare, La Lechera and Carlos V. The Zone achieved market share gains in pet food, Infant Nutrition, and portioned coffee, with losses in dairy, following portfolio optimization.
Zone Greater China
Organic growth was 3.7%, with pricing of 1.5% and RIG of 2.1%. Foreign exchange had a negative impact of 9.8%. Reported sales in Zone Greater China decreased by 5.9% to CHF 1.2 billion. Growth was driven by continued momentum in out-of-home and e-commerce channels. The Zone saw market share gains in soluble coffee, confectionery, and pet food, with losses for Wyeth infant nutrition products.
By product category, confectionery was the largest growth contributor, led by Hsu Fu Chi and Shark Wafer. Nestlé Professional achieved double-digit growth, fueled by innovation and customer acquisition. Coffee delivered mid-single digit growth, driven by Nescafé ready-to-drink offerings. Sales for Purina PetCare grew at a double-digit rate, based on new product launches and strong e-commerce momentum, particularly for Pro Plan and Fancy Feast. Infant Nutrition saw positive growth, with continued strong demand for NAN, which more than offset a sales decline for Wyeth products. Culinary posted slightly negative growth, as positive sales trends in out-of-home channels were more than offset by a decrease in retail sales.
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