Coffee fuels Nestlé sales

Nestlé’s turnover increased again last year, partly thanks to the strong performance of its coffee brands. Nevertheless, the company expects a deceleration in growth in the current year.

Cost inflation

Reported sales of the Swiss food giant increased by 3.3 per cent and reached 87.1 billion Swiss francs (83 billion euros). On an organic basis, however, there was a 7.5 per cent growth, of which one-quarter is attributable to price increases. Nestlé raised prices even further in the fourth quarter to offset rising costs and maintain its margins.

On a category basis, coffee was the largest contributor to organic growth, fuelled by strong momentum for its three key brands Nescafé, Nespresso and Starbucks. For instance, sales of Starbucks products rose by 17.1 per cent to 3.1 billion Swiss francs (3 billion euros). Double-digit growth was also recorded in the pet food division (Purina PetCare) and vegetarian and plant-based food products. On the other hand, baby food lost ground due to sluggish sales in China and lower birth rates worldwide.

Underlying operating profit rose 1.4 per cent to 15.1 billion Swiss francs (14.5 billion euros). Profitability declined slightly, with an underlying operating margin of 17.4 per cent, writes Belgian business news site Business AM.

For the current year, Nestlé expects organic sales growth of around 5 per cent and an underlying operating margin of between 17.0 and 17.5 per cent.