Nestlé posts ‘best sales growth in five years’ due to stockpiling

Nestlé has reported organic sales growth of 4.3% in its first quarter results, driven by increased consumer stockpiling of its coffee, frozen food and pet food brands.

According to Reuters, this marks Nestlé’s best quarterly sales growth in nearly five years.

For its first quarter, the Swiss food giant posted total sales of CHF 20.8 billion ($21.3 billion) representing a 6.2% decrease, mainly due to the divestment of its Skin Health and US ice cream business last year.

Growth was supported by strong momentum in the Americas and Zone EMENA, thanks to consumer stockpiling causing increased growth in March.

Whereas China saw a sharp sales decline due to lock-down restrictions for the full quarter, limited consumer stockpiling and relatively higher exposure to out-of-home channels. This led to a 4.6% drop in sales for Nestlé’s Zone Asia, Oceania and sub-Saharan Africa (AOA).

Nestlé has also announced the potential sale of its Yinlu peanut milk and canned rice porridge businesses in China, but will retain its existing Nescafé ready-to-drink coffee business that is currently filled and distributed by Yinlu.

In zone Americas, its largest unit, Nestlé recorded organic growth of 7.4% led by strong performance in North America and Brazil. In North America, beverages including Starbucks products, Nescafé and Coffee-Mate grew at a high single-digit rate as well as frozen food, in particular the brands DiGiorno, Stouffer’s and Hot Pockets.

Nestlé’s Europe, Middle East and North Africa (EMENA) unit recorded 7.1% organic growth driven by prepared dishes and cooking aids, coffee and infant nutrition with increased consumer demand for products with Human Milk Oligosaccharides (HMOs).

According to Nestlé, all markets saw a significant shift from out-of-home to in-home consumption while out-of-home channels posted negative growth including significant sales declines for Nestlé Professional, water and Nespresso boutiques.

Nestlé Health Science posted double-digit growth, reflecting elevated demand for consumer and medical nutrition products.

Unlike other companies such as Danone which have withdrawn their full-year guidance, Nestlé has maintained its original full-year guidance and expects continued improvement in its organic sales growth.

“Our company remained resilient in the first quarter, reflecting our diversified product portfolio and our strong local presence in 187 countries,” said Mark Schneider, Nestlé CEO.

“However, this crisis is far from over and we will face many uncertainties in the coming quarters. We will continue to adapt quickly to changing consumer needs and to challenges in our global supply chains.”