Nestlé has reported 9.3% organic sales growth in the first quarter, driven by a 9.8% increase in prices, compared to a 5.2% increase in the year-ago quarter.
The company’s real internal growth was -0.5%, impacted by capacity constraints and portfolio optimisation actions.
For its first quarter, the owner of Nescafé and Milkybar, posted a total sales increase of 5.6% to CHF 23.47 billion (approx. $26.43 billion), up from last year’s CHF 22.2 billion (approx. $25 billion).
Coffee, alongside the company’s pet care brands, was once again the best performing category, thanks to continued demand for Nescafé, Starbucks and Nespresso products.
Meanwhile, sales in confectionery and infant nutrition saw double-digit growth, and dairy reported high single-digit growth, with strong demand for coffee creamers and affordable fortified milks.
Despite temporary capacity constraints on the food and drink giant’s Perrier water brand, its water business posted low single-digit growth led by S. Pellegrino.
Nestlé’s Nespresso unit grew organically by 2.9% compared to 3.3% in the same period last year, “mainly due to post-pandemic normalisation”.
Sales in North America increased by 8.9% to CHF 6.31 billion (approx. $7.1 billion), representing an 11.6% organic growth led by pricing, strong operational execution and continued momentum in e-commerce. The zone saw market share gains in pet food, frozen meals and soluble coffee.
In Europe, organic growth reached 9.7% with continued market share gains, particularly in pet food, confectionery and infant nutrition. Sales in Europe increased by 5.4% to CHF 4.88 billion (approx. $5.5 billion).
In the Asia, Oceania and Africa (AOA) region, sales grew organically by 10.4%, seeing market gains in the culinary, coffee and ice cream categories. Sales in the AOA increased by 1.1% to CHF 4.6 billion (approx. $5.2 billion), down from 3% increase in Q1 2022.
The company’s Health Science business recorded an organic sales growth of 2.8%, with a sales increase of 11.3%, driven by pricing, e-commerce momentum and geographic expansion.
Mark Schneider, Nestlé’s CEO, said: “Nestlé delivered strong organic growth in the first quarter, as our teams worked diligently to protect volume and ensure resilient mix. Portfolio optimisation efforts and responsible pricing helped to offset the ongoing pressures from two years of cost inflation.”
He continued: “We continued our portfolio management journey with the creation of a joint venture dedicated to the frozen pizza business in Europe. The new partnership provides the best platform to develop the full potential of this business.”
Nestlé confirmed its 2023 full-year outlook, expecting organic sales growth between 6% and 8%.
© FoodBev Media Ltd 2023