In its results for fiscal year 2021, Nestlé reports net profit growth of 38.2% to CHF 16.9 billion (US$18.3 billion), amid cost inflation challenges. By product category, the largest contributor to organic growth was coffee, fueled by strong momentum for the three main brands Nescafé, Nespresso and Starbucks.
Total group sales increased by 3.3% to CHF 87.1 billion / US$94.5 billion (2020: CHF 84.3 billion / US$91.5 billion). This figure was significantly bolstered by double-digit growth in plant-based offerings, as global consumers crave diversified protein options.
“In 2021, we remained focused on executing our long-term strategy and stepping up growth investments, while at the same time navigating global supply chain challenges. Our organic growth was strong, with broad-based market share gains, following disciplined execution, rapid innovation and increased digitalization,” remarks Mark Schneider, Nestlé CEO.
“We limited the impact of exceptional cost inflation through diligent cost management and responsible pricing,” he adds.
“The evolution of our portfolio continued, focusing on categories with attractive growth opportunities and differentiated offerings. Recent examples include the acquisition of the core brands of The Bountiful Company and the divestiture of the mainstream water brands in North America.”
Coffee and plant-based segments see wins
Organic growth reached 7.5%, with real internal growth of 5.5% and pricing of 2.0%. This growth was supported by continued momentum in retail sales, steady recovery of out-of-home channels, increased pricing and market share gains.
By channel, organic growth in retail sales was 6.4%. E-commerce sales grew by 15.1%, reaching 14.3% of total group sales, with strong momentum in most categories, particularly Purina PetCare, coffee and Nestlé Health Science.
Organic growth in out-of-home channels reached 24.5%, helped by a low base of comparison due to the pandemic.
Sales of Starbucks products grew by 17.1% to reach CHF 3.1 billion (US$3.4 billion), generating over CHF 1 billion (US$1.1 billion) of incremental sales compared with 2018.
Prepared dishes and cooking aids reported high single-digit growth, based on strong sales developments for Maggi, Stouffer’s and Lean Cuisine.
Sales in vegetarian and plant-based food grew at a double-digit rate, reaching around CHF 800 million (US$868.4 million).
Nestlé Health Science recorded double-digit growth, reflecting strong demand for vitamins, minerals and supplements, as well as healthy-aging products.
Dairy saw mid-single-digit growth, based on strong demand for premium and fortified milks, coffee creamers and ice cream.
Sales in confectionery grew at a high single-digit rate, supported by a strong sales development for KitKat and gifting products.
Water posted high single-digit growth, driven by premium brands and a recovery in out-of-home channels. Infant Nutrition reported negative growth, impacted by a sales decline in China and lower birth rates globally. Sales of human milk oligosaccharides (HMOs) products continued to see robust growth, reaching CHF 1.2 billion (US$1.3 billion).
Purina PetCare posted double-digit growth, led by science-based and premium brands Purina Pro Plan, Fancy Feast and Purina ONE, as well as veterinary products.
Portfolio management highlights
Nestlé completed acquisitions and divestments with a total value of around CHF 9.9 billion (US$10.7 billion) in 2021.
In August, Nestlé completed the acquisition of the core brands of The Bountiful Company for US$5.8 billion. The Bountiful Company is the number one pure-play company in the highly attractive global nutrition and supplement category, Nestlé highlights.
In July, the company completed the acquisition of Nuun, a leading company in the fast-growing functional hydration market, and entered into an agreement with Seres Therapeutics to jointly commercialize SER-109, an investigational oral microbiome therapeutic in the US and Canada.
Meanwhile, Nestlé’s global water business continues to sharpen its focus on international premium and mineral water brands and healthy hydration products.
In March, the company completed the acquisition of Essentia Water, a premium functional water brand in the US, and the sale of its regional spring water brands, purified water business and beverage delivery service in the US and Canada.
Meanwhile, Nestlé continues to expand the reach of Starbucks branded coffee and tea products outside Starbucks retail stores. In July, Nestlé and Starbucks announced a new collaboration to bring Starbucks ready-to-drink coffee beverages to select markets across South-East Asia, Oceania and Latin America.
Net divestitures decreased sales by 2.9%, largely related to the Nestlé Waters North America, Yinlu and Herta transactions.
Divestitures were partially offset by acquisitions, including the core brands of The Bountiful Company and Freshly. The negative impact on sales from foreign exchange moderated to 1.3%. Total reported sales increased by 3.3% to CHF 87.1 billion (US$94.5 billion).
By Benjamin Ferrer
Source: foodingredientsfirst.com
Temperature-controlled storage and logistic solution provider, Emergent Cold LatAm, has opened ‘Chile’s largest’ frozen food warehouse. Located in Talcahuano, a region renowned for its seafood and fruit production and exports, the warehouse represents a strategic enhancement of the local cold chain infrastructure.
Never Never gin will be sold through Asahi’s alcohol division, Carlton & United Breweries (CUB). According to the company, the acquisition – which won’t impact daily operations – will enable Never Never’s premium gin to reach a wider customer base while enhancing support and product offerings for existing customers.
Coca-Cola Europacific Partners (CCEP) announced today the forthcoming departure of Nik Jhangiani, senior vice president and chief financial officer, with plans underway to identify his successor. Jhangiani will be stepping down to assume the role of CFO at Diageo later this year.
