Nestlé's Sales Growth Slows as Once Panic-Struck Shoppers Cut Back
July 30 2020 - 6:58AM
Dow Jones News
By Saabira Chaudhuri
Nestlé SA said sales slowed in recent months from the blistering
pace set earlier this year, when shoppers stripped shelves bare
during coronavirus lockdowns.
Still, the world's biggest packaged food company said Thursday
that second-quarter organic sales grew 1.3% from the previous year,
bolstered by pet food -- which has remained a hot seller in the
pandemic era.
Nestlé, along with rivals such as Kraft Heinz Co. and Campbell
Soup Co., benefited earlier this year when consumers stockpiled
familiar comfort foods from big brands as the pandemic took hold.
That drove a 4.3% rise in Nestlé's first-quarter sales, but the
company said some consumers had held back adding to already full
pantries in the past few months. Lower sales of products sold
outside of the home, like water, also weighed on the most recent
quarter, it added.
Overall, the maker of Nescafé coffee and DiGiorno pizza said
first-half sales rose 2.8% on an organic basis -- which strips out
M&A and currency impacts -- beating analyst estimates for
growth of 2.3%. Revenue dropped 9.5% to 41.15 billion Swiss francs
($44.94 billion) in the first six months of the year, while net
profit rose 18.3% to 5.9 billion francs boosted by one-off items
such as the sale of its U.S. ice cream business.
Pet food was the biggest contributor to growth among Nestlé's
categories, with pricier lines Purina Pro Plan -- marketed as
tailoring nutrients to meet specific needs of pets at different
stages of life -- doing particularly well.
During the half, sales in North America logged mid-single-digit
organic growth, driven by pet food, coffee, baking products and
frozen foods as consumers continued to eat at home.
China posted a double-digit decline in first-half sales, as a
recovery in recent months failed to offset sharp falls in sales
early in the pandemic.
In Europe, the Middle East and North Africa, Nestlé said sales
grew 2.4% on an organic basis in the six-month period, but that
gains in the first quarter were partly offset by declines in more
recent months. Those were caused by weakness in out-of-home sales
for water and the company's business selling to cafes and
restaurants.
Nestlé -- the world's largest bottled water maker -- in June
said it was exploring a sale of the majority of its North America
waters business, including brands such as Poland Spring and Pure
Life. The company instead plans to focus on upscale and
international brands including San Pellegrino and Perrier, as well
as functional water. Together those lines make up about 20% of its
North America water sales.
The company said Thursday that San Pellegrino had continued to
grow in the U.S. in the first half even as the overall water
business in the country logged a sales drop.
Globally, water sales dropped 10.4% on an organic basis in the
first half.
Nestle remains a rarity amid the pandemic in offering firm
financial guidance for the year, despite the volatility caused by
Covid-19. The company said it expects full-year organic sales
growth between 2% and 3%.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
July 30, 2020 06:43 ET (10:43 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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