Nestlé has posted organic sales growth of 8.7% for the first half of 2023, after the food giant again raised prices to cope with higher input costs.
In the first half, Nestlé’s total reported sales grew 1.6% to CHF 46.3 billion (approx. $53.18 billion), compared to 9.2% sales growth to CHF 45.58 billion (approx. $47.42 billion) in the same period last year.
The owner of Milkybar and Nescafé increased prices by 9.5% while real internal growth decreased by 0.8%, with a negative impact of around 60 basis points from portfolio optimisation actions.
By product category, Purina PetCare was again the largest contributor to organic growth. Meanwhile, sales of coffee rose at a high-single-digit rate, with positive sales developments across brands and a continued recovery for out-of-home channels. This month, Nestlé launched a variety of new products under its Nescafé brand, including Aero golden honeycomb mocha and the Nescafé Gold Dessert Edition, a coffee collection inspired by popular desserts.
The company’s infant nutrition segment posted double-digit growth, while dairy reported high single-digit growth, with strong demand for coffee creamers and affordable fortified milks.
Confectionery recorded double-digit growth, fueled by a strong sales development for KitKat – Nestlé launched a new KitKat cereal in March, and in May unveiled a new limited-edition churro-flavoured KitKat. The Prepared dishes and cooking aids segment posted mid-single-digit growth, led by Maggi.
The quarter saw Nestlé’s Health Science unit sales grow by 3.5%, compared to 6.6% in the year-ago period, with a return to positive growth for vitamins, minerals and supplements. Earlier this year, the unit announced a $43 million investment to expand its manufacturing facility in Eau Claire, Wisconsin.
Despite temporary capacity constraints for Perrier, water posted mid-single-digit growth led by San Pellegrino and Acqua Panna. In May, Nestlé Waters announced plans to cut 171 jobs at its Vosges facility in eastern France, in a bid to scale back production at the site.
By channel, organic growth in retail sales remained strong at 8%. Meanwhile, organic growth in out-of-home channels reached 17.1%.
Nestlé’s Zone North America unit posted a 3.4% rise in sales to CHF 12.6 billion (approx. $14.47 billion). On an organic basis, sales grew 10%.
The business’s Europe unit recorded organic sales growth of 8.9%, supported by pricing, strong sales development for e-commerce and continued momentum for out-of-home channels.
On an organic basis, sales grew by 9.3% in Nestlé’s Zone Asia, Oceania and Africa (AOA); 11.6% in Zone Latin America; and 4.7% in Zone Greater China.
The food giant increased its FY 2023 outlook with organic sales growth guidance between 7-8%.
Nestlé CEO Mark Schneider said: “We pursued our strategic priorities with discipline and focus in a fast-evolving consumer environment. Based on the strong performance in the first half of the year we upgrade our organic sales growth outlook for 2023. At-home consumption post-Covid-19 has now normalised, removing a growth drag on some of our categories. Out-of-home channels continue to see strong growth momentum.”
He continued: “For the remainder of the year, we are confident that we will deliver a positive combination of volume and mix, an improvement in gross margin and a significant increase in marketing investments. Combined with ongoing portfolio management and optimisation as well as the continued implementation of our sustainability initiatives, we are well-positioned to grow and to generate value for our stakeholders.”
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