Nestl logs 6% organic growth

Nestl logs 6% organic growth

Global giant notched 11.7 percent organic growth in emerging markets and 2.4 percent in developed markets. What's next for Nestlé?


  • Sales up 11 percent to CHF 67.6 billion
  • 6.1 percent organic growth, 2.9 percent real internal growth
  • 11.7 percent organic growth in emerging markets and 2.4 percent in developed markets
  • Full-year outlook confirmed: organic growth of 5 percent to 6 percent, improved margin and underlying earnings per share in constant currencies

Paul Bulcke, Nestlé CEO: “Nestlé’s growth in the first nine months is in line with our expectations. It is the result of the capabilities built over time in innovation, distribution and engaging with consumers. We delivered double-digit growth in emerging markets, where we are expanding our routes to market and enhancing our product offerings. We grew in the intensely competitive developed markets in spite of a general economic malaise and low levels of consumer confidence. Our continued momentum in real internal growth, combined with some easing of input cost pressures, allows us to confirm our full-year outlook.”

In the first nine months of 2012, the Nestlé Group’s organic growth was 6.1 percent, composed of real internal growth of 2.9 percent and pricing of 3.2 percent. Foreign exchange contributed 2.2 percent, positive for the first time this year. Acquisitions, net of divestitures, contributed 2.7 percent. Total sales increased 11.0 percent to CHF 67.6 billion.

Business review
The Nestlé Group continued to grow in all regions of the world: the Americas achieved organic growth of 6.1 percent, Europe 2.5 percent and Asia, Oceania and Africa 10.8 percent. Our business grew 11.7 percent in emerging markets and 2.4 percent in developed markets.

Zone Americas
Sales of CHF 20.9 billion, 5.5 percent organic growth, 0.4 percent real internal growth

  • Growth in the zone was broad-based, with most categories and regions contributing.
  • In North America the trading environment remained subdued, reflecting tough economic conditions and low consumer confidence. The frozen meals and pizza categories continued to decline but our share performance by Stouffer’s and Lean Cuisine improved. The recent launches in pizza, Italian-style favourites and pizza dipping strips continued to perform well. Ice cream improved, whilst there were strong performances in both soluble coffee and coffee creamers: Nescafé Clásico and Coffee-Mate Natural Bliss were highlights. Petcare maintained the positive momentum seen so far this year, with good performances in the cat category from Friskies and Fancy Feast, and from Beneful for dogs. Tidy Cats also did well.
  • There was double-digit growth in Latin America, with good contributions from most markets and regions. Brazil and Mexico both continued to drive strong growth. The chocolate, soluble coffee and ice cream categories grew well. Petcare reported growth of more than 20 percent.

Zone Europe
Sales of CHF 11.2 billion, 1.9 percent organic growth, 0.5 percent real internal growth

  • The zone’s innovation platforms, particularly in beverages and in petcare, continued to create growth in a deteriorating economic environment.
  • The Great Britain region, France and Switzerland were highlights among Western Europe’s main markets. Greece and Benelux also continued to grow.
  • In Central and Eastern Europe, Russia, Ukraine, the Adriatic region and Romania all made a positive contribution.
  • There was good growth in a number of categories. In coffee, both Nescafé soluble coffee and the Nescafé Dolce Gusto system performed well. Ice cream picked up well in the third quarter, after a slow start to the season. Pizza brands Wagner and Buitoni were the highlights in the frozen business. Our popularly positioned products were also a key growth driver for the zone, particularly in Russia and the Great Britain and Iberia regions. Petcare continued its strong momentum across Europe.

Zone Asia, Oceania and Africa
Sales of CHF 14.0 billion, 9.4 percent organic growth, 6.3 percent real internal growth

  • The zone focused on driving deeper distribution, innovating in all areas from premium to popularly positioned products, enhancing its capacities and integrating Yinlu and Hsu Fu Chi. Total sales for the zone, including the new partnerships, were up 25.9 percent from CHF 11.1 billion in the corresponding period of 2011.
  • The emerging markets delivered double-digit growth. Africa grew at twice the zone average and the Middle East also performed extremely strongly. China and Indonesia were among the other markets contributing well. The categories that were the key growth drivers were dairy, powdered beverages and ready-to-drink, particularly Nescafé, ambient culinary with Maggi and Totole, chocolate including Shark in China, and ice cream.
  • Among developed markets, Japan reported growth due to its coffee systems Nescafé Barista and Nescafé Dolce Gusto, and chocolate, primarily Kit Kat.

Nestlé Waters
Sales of CHF 5.6 billion, 5.8 percent organic growth, 4.0 percent real internal growth

  • All regions grew, with North America and the emerging markets the key drivers.
  • In North America we continued to see dynamic growth in the premium waters Perrier and S.Pellegrino, as well as in the value brand Nestlé Pure Life. Among the regional brands, Poland Spring and Ice Mountain were highlights.
  • Growth in Europe was good in the third quarter, particularly in France, the UK, Poland and Hungary. Vittel, Buxton, Perrier and S.Pellegrino were key contributors.
  • The emerging markets grew double-digit, with high levels of growth across many markets. Nestlé Pure Life, as well as local brands such as La Vie, Erikli and Al Manhal performed well.

Nestlé Nutrition
Sales of CHF 5.8 billion, 6.6 percent organic growth, 2.4 percent real internal growth

  • Infant Nutrition achieved high growth in emerging markets, driven by infant formula and cereals, both of which continued to benefit from successful innovations and multi-market roll-outs for brands such as Nestlé NAN, Lactogen, Nestum and Cerelac. Trading conditions were subdued in a number of developed markets due to category contraction. However, innovations such as pouches for Gerber in the US and NaturNes plates in France created growth in their categories.
  • Performance Nutrition achieved positive growth, driven by the US and Europe. Weight Management continued to be challenged in its key market, the US.

Sales of CHF 10.1 billion, 8.9 percent organic growth, 6.3 percent real internal growth

  • Nestlé Professional maintained its momentum, driven by double-digit growth in emerging markets and North America. The food business expanded its product range under the Chef and Maggi brands following the acquisition of the stocks and sauces business Oscar. The beverage business continued to roll out its beverage systems Nescafé Milano, Viaggi by Nescafé and Nescafé Alegria which are now in sixty countries. It also achieved strong growth in its traditional soluble coffee and ready-to-drink categories.
  • Nespresso achieved double-digit growth in a period characterised by a high level of innovation, including three limited edition coffee launches and two new machines, as well as 28 boutique openings.
  • The Nestlé Health Science portfolio of products performed well. The acquisitions are integrated and delivering to plan, or better. The Nestlé Institute of Health Sciences is now beginning to enhance our capabilities through its work on personalised nutritional solutions for specific medical conditions.
  • The Cereal Partners Worldwide joint venture continued to achieve strong growth in emerging markets and subdued growth, in line with its category, in developed markets. There was high single-digit growth in the Pharma joint ventures, driven by dermatology.

As we expected, the tough trading environment, especially in developed markets, is continuing. Our performance year-to-date is in line with our expectations. The capabilities built over time in innovation, distribution and engaging with consumers are driving our growth. This, combined with some easing of input cost pressures, allows us to confirm our guidance for the full year: we are well positioned to deliver the Nestlé Model of organic growth of 5 percent to 6 percent, improved margin and underlying earnings per share in constant currencies.


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