Strong demand for coffee boosts Nestlé's sales

Nestlé performed better than expected in the first quarter. Increased demand for coffee and baked goods boosted sales.

Nespresso grew by 17 per cent

The world’s largest food company reported organic sales growth of 7.7 per cent (excluding acquisitions, divestments and currency effects). That is double the organic growth of 3.3 per cent which analysts were expecting, according to the Financial Times.

The coffee segment was the biggest contributor to growth, fuelled by a strong increase in sales of Nespresso capsules, Nescafé instant coffee and Starbucks products. The dairy division also made good progress, aided by the continued trend of home baking during the pandemic and rising sales of fortified milk. The baby food division and bottled water, however, lost ground.

In China, there was a growth of more than 10 per cent, thanks to the recovery of out-of-home channels and the timing of the Chinese New Year. One year ago, large parts of the country were still under strict restrictions to slow down the spread of the coronavirus.

Satisfied

“We are satisfied with Nestlé’s strong organic sales growth during the first quarter,” CEO Mark Schneider said in an update on the numbers. “Retail sales showed solid growth, and out-of-home channels showed signs of improvement.”

The increase in sales was tempered by significant currency effects, as the Swiss franc went up in value against other currencies. Hence, the reported sales rose by “just” 1.3 per cent to 21.1 billion Swiss francs (19 billion euros).