Nestlé sales boosted by coffee and pet food


Nestle HER

NSRGY -1.76%

raised its full-year sales forecast for the second consecutive quarter, supported by strong demand for coffee and pet food, despite continued challenges from rising input costs and issues of the supply chain.

On Wednesday, the world’s largest packaged food company reported a 6.5% increase in organic sales growth in the third quarter, with revenue for the first nine months of the year standing at 63.29 billion Swiss francs, or 68.60 billion dollars. Nestlé said it now expects annual growth of between 6% and 7%, up from its previous forecast of 5% to 6%.

The optimistic quarter is a warning sign that drinking habits learned during the pandemic, such as drinking more and better coffee at home, could continue to benefit the company, even as virus restrictions have receded on some large markets – an opinion expressed by Nestlé executives.

While some analysts questioned whether the coffee boom would continue with the easing of lockdown restrictions, Nestlé said the category was its main contributor to growth, with its three main brands – Nescafé, Nespresso and Starbucks – seeing strong growth. growth.

The Swiss company has made coffee a priority in recent years, including acquiring the rights to sell Starbucks-branded products in stores.

Nestlé also said other products that exploded during the pandemic, such as pet foods and vitamins, minerals and supplements, continued to perform well. He said e-commerce sales, another beneficiary since the Covid-19 strike, grew 17% in the first nine months of the year, even as out-of-home sales rose 23%.

However, like others in the consumer goods industry, Nestlé is grappling with rising raw material prices and higher transportation costs which it believes would continue to reduce its profit margin.

The company said its underlying trading operating profit margin is expected to be around 17.5% for the full year, reflecting an initial delay between rising input costs and Nestlé’s ability to raise prices. .

Nestlé said it had increased prices by 2.1% on average in the third quarter, but did not disclose details on individual product lines.

Managing Director Mark Schneider said the company has been working hard “to cope with inflation in input costs and supply chain constraints.”

Tuesday, Danone HER,

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the owner of Evian Water and Dannon yogurt, said he expected inflation related to materials, logistics and manufacturing to hit around 9% in the second half of the year, up from around 7% % in the first half of the year. Procter & Gamble Co.

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, maker of Tide detergent and Crest toothpaste, said it would start charging more for razors and some beauty and oral care products as the costs of everything from warehouse space to raw materials, would grow faster than expected by the consumer products company.

On Wednesday, Nestlé said its North American business showed mid single-digit growth amid severe supply chain constraints in the first nine months of the year, while its China business posted a low single-digit growth, affected by lower sales of infant nutrition products.

Nestlé shares rose more than 3% at the start of the session and are now up 12% since the start of the year.

Write to Nick Kostov at [email protected]

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