Nestlé today spoke with investors to discuss its nine-month sales for 2023 outlining how the global food and beverage company has achieved positive organic growth through its ongoing efforts at portfolio optimization focusing on profitable brands and categories.
According to Nestlé, global organic growth was 7.8%. Pricing was 8.4%, reflecting the impact of cost inflation over the last two years. RIG was - 0.6%, impacted by portfolio optimization and remaining capacity constraints. Growth was broad-based across most geographies and categories.
"Our diversified portfolio and differentiated offerings helped us deliver strong organic growth in the first nine months of the year,” says Mark Schneider, Nestlé CEO in a release accompanying the results announcement. “Growth was driven by pricing as we continued to navigate historic inflation levels. The recovery of our volume and mix is underway. We are seeing the benefits of our portfolio optimization initiatives and increasing marketing investments behind our billionaire brands. These steps underpin our confidence that real internal growth, the sum of volume and mix, will turn positive in the second half of the year and again become the main driver of growth going forward.”
In North America, organic growth was 8.0%, and across North America, Nestlé maintained broad-based growth across most brands and categories, despite a challenging consumer environment. Nestlé says that growth was driven by pricing, favorable mix as well as strong momentum in e-commerce across categories and out-of-home channels, with market share gains in pet food, soluble and portioned coffee, as well as frozen meals.
Francois-Xavier Rogers, chief financial officer with Nestlé S.A. says this growth can be primarily attributed to the benefits that came from the company’s efforts in portfolio optimization, which saw a renewed focuses on categories and products that provide high growth and high margins.
For example, Purina PetCare was the largest growth contributor in North America followed by beverages category, including Starbucks products, Coffee Mate and Nescafé, which posted mid single-digit growth. Gerber baby food reported mid single-digit growth, led by healthy snacking and infant cereals.
In Canada, growth came from confectionaries with recorded double-digit growth, fueled by KitKat, while in frozen foods sales fell considerably, driven by the winding down of Nestle’s Canadian frozen meals and pizza business in Canada. That saw the disappearance of such brands as Delissio, Stouffer's, Lean Cuisine, and Life Cuisine from Canadian frozen food shelves.
"Nestlé Canada attributes much of its long-term success to its ability to adapt and evolve within the industry. This decision enables us to further invest in priority categories. We remain open to enhancing our portfolio where it makes sense for our business," said John Carmichael, president and CEO, Nestlé Canada when the announcement was made about in early February of 2023 of the winding down of the frozen meal business.
In the U.S., growth in frozen food was positive, with robust growth and market share gains for such pizza brands Jack’s and Tombstone.
With the growing popularity in healthy eating and an increasing number of people turning to treatments from Ozempic to lose weight, Schneider says Nestlé will put a greater focus going forward on developing supplements to assist people on their weight-loss journey. He adds that he does not believe this trend for using such drugs for weight reduction will have an impact Nestlé’s growth or profits from its food offerings. As he notes, people still need to eat and continue to enjoy drinking coffee.
However, Nestlé will keep a close eye on markets to see if in the future such treatments impact food buying choices and eating habits.