Nestlé sales growth boosted by new products

Nestlé said it had maintained its strong sales momentum of the first half, as investment in marketing and new products produced sustained growth for the third quarter, in spite of adverse currency factors.

The world’s biggest foods group said on Friday it was on track to report record sales and profits this year, in spite of booming commodity prices and currency headwinds caused by the strong Swiss franc.

Group sales in the first nine months rose by 4.1 per cent to SFr82.8bn ($85.8bn), while sales in the core foods and beverages business climbed by 4.5 per cent to SFr77bn. Nestlé releases no profits figures at the nine months stage.

The figures came as the group highlighted the 75th anniversary of its Kit Kat chocolate bar. Nestlé said that sales of Kit Kat, available in more than 80 countries, amounted to SFr1.4bn last year. Some 540 Kit Kat “fingers” are consumed every second, and 17.6bn fingers a year, according to the company’s estimates.

Nestlé highlighted its ability to adapt Kit Kats to local tastes and consumer preferences as part of its ability to achieve growth in mature regions and boost sales in expanding ones. In India, for example, the group produces a three-finger Kit Kat bar catering to local price preferences.

Group sales momentum in the third quarter was spurred by emerging markets. Sales of food and beverage sales rose by almost 11 per cent, driven partly by boosting distribution and Nestlé’s strategy of selling goods in smaller quantities or cheaper packaging to create brand loyalty.

By contrast, revenues rose by 5.5 per cent in the Americas, Nestlé’s biggest region, and 3.3 per cent in Europe. All the growth rates are based on Nestlé’s definition, which excludes currency factors and acquisitions and divestments.

“The first half’s growth momentum continued unabated in the third quarter, providing a good base for the full year”, said Paul Bulcke, chief executive.

“Overall the results were great. Nestlé remains the epitome of strength and consistency. Any concerns that Nestlé’s strong momentum from the first half would subside have been shown to be unfounded,” said Andrew Wood, analyst at Sanford C Bernstein.

Nestlé said its emerging markets growth was broadly based across its Africa, Oceania and Asia region, with dairy products, ready meals and drinks and beverages doing particularly well, as well as confectionery.

In Europe, where some rivals have been struggling amid cutthroat competition and price sensitive consumers, Nestlé said it had gained market share in many countries. Sales in the Americas were buoyant, with Brazil and Mexico particularly strong.

Sales of specialised foods and beverages, led by the Nespresso brand, continued to soar. Sales jumped by 9.5 per cent organically to just over SFr8bn, the fastest growth of any of the group’s reporting segments. Nespresso’s organic growth remained more than 20 per cent. In other product categories, waters and nutrition performed above expectations.

In mid-morning trading, Nestlé shares were flat at SFr53.05 on profit-taking.