Nestlé Keeps Q1 Sales On Track By Continuing Product Innovation And Improving Margins

By Karla Paris

Severe weather, a flat retail environment, and volatile conditions internationally aren’t stopping Nestle from growing

Nestle has been facing difficult times with slow growth in emerging markets, unusually severe winter weather in the U.S., and weaker sales in developed markets.  With all that stacked against Nestle, the company was still able to post 4.2% organic growth for Q1, albeit, the posting was the slowest growing quarter for the company since 2009.

Nestle noted that rolling out new products has helped sustain growth amid difficult market conditions, adding that it would keep innovating and supporting its brands. The company invested heavily in its Nestlé Waters product line, including Nestlé Pure Life, to support growth within this category. International growth of the Nestlé Pure Life was headed by the emerging markets of China, Egypt, and Brazil.  Growth in the U.S. is attributed to an increased awareness of bottled water as a healthier alternative to soda and other sugar-laced beverages.  

Nestlé Nutrition achieved growth, but at a slower rate in the context of tough comparisons. The drivers were the emerging markets, notably China and the Middle East.  Supported by innovations such as easy scoop packaging and premium formulations, Nestlé Nutrition saw big gains in Infant formula and cereals.

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Nestlé Health Science had a good start to the year across all regions and businesses even though the pressure on public sector healthcare budgets continued to have an impact.  Key brands driving growth for Nestlé in this division included Boost, Peptamen and Alfamino.

With 2014 first-quarter results now posted, Nestle has reached sales of over $20.8 billion.  Organic growth represents a 4.2 percent increase overall while real internal growth is at a 2.6 percent increase overall.  Nestlé’s first-quarter sales by product are as follows:

• Powdered and liquid beverages reached sales of over $4.7 billion.
• Water sales showed the most significant real internal growth with sales of over $1.4 billion.
• Milk products and ice cream revealed the largest organic growth with sales just over $3.7 billion.
• Nutrition & HealthCare sales were over $2.7 billion.
• Prepared dishes and cooking aids took a loss of nearly 2 percent with sales coming in at just over $3.1 billion.
• Confectionery sales showed the largest decrease in real internal growth with sales of $2.2 billion.
• Pet care sales pulled ahead of confectionary with sales of $2.7 billion.