Nestlé Posts 7.7% Organic Growth, Sub-Saharan Africa Grew Double-Digit

Swiss food giant, Nestlé has recorded 7.7% organic sales growth in the first quarter, with real internal growth (RIG) of 6.4% and pricing of 1.2%. driven by a boost in coffee sales and a gradual recovery in out-of-home channels.

Growth was broad-based across most geographies. Organic growth was 5.0% in developed markets, based mostly on RIG. Pricing was positive. Growth in emerging markets was 11.4%, with strong RIG and positive pricing.

Most product categories delivered strong organic growth. Coffee was the largest contributor to growth, fueled by strong demand for Nespresso, Nescafé and Starbucks products. Dairy grew at a double-digit rate, based on elevated demand for home-baking products and fortified milk.

The company witnessed a 4.4% organic sales rise in the EMENA zone to CHF 5.2 billion ($5.67 billion), with coffee and Purina PetCare as key growth drivers. Each region posted positive growth with strong momentum in Russia, Turkey, Italy and the UK.

Zone Asia, Oceania and sub-Saharan Africa (AOA)

• 9.1% organic growth: 8.8% RIG; 0.3% pricing.
• China posted double-digit organic growth, based on strong RIG partially offset by slightly negative pricing.
• South-East Asia saw low single-digit organic growth, with positive RIG and slightly negative pricing.
• South Asia reported double-digit organic growth, with strong RIG and positive pricing.
• Sub-Saharan Africa recorded double-digit organic growth, led by strong RIG and positive pricing.
• Japan, South Korea and Oceania combined saw low single-digit organic growth. Positive RIG was partially offset by slightly negative pricing.

Organic growth reached 9.1%, with RIG of 8.8%. Pricing increased to 0.3%. Net divestitures had a negative impact of 3.4%, largely related to the divestment of the Yinlu peanut milk and canned rice porridge businesses in China. Foreign exchange reduced sales by 3.4%. Reported sales in Zone AOA increased by 2.3% to CHF 5.1 billion.

Zone AOA reported high single-digit organic growth, helped by a low base of comparison in China. Outside of China, the Zone grew at a mid-single-digit rate. Most categories gained market share, particularly coffee and pet food.

China saw double-digit growth, helped by a recovery in out-of-home channels and the timing of Chinese New Year. Growth was broad-based across most product categories, reflecting continued momentum in e-commerce and a strong innovation pipeline.

The largest growth contributor was Nestlé Professional, as sales improved significantly. Coffee, culinary, dairy and confectionery all grew at double-digit rates. Growth in Infant Nutrition turned positive. Purina Petcare reported strong growth, led by premium offerings such as Purina Pro Plan and veterinary products.

South-East Asia posted low single-digit growth in a difficult economic environment. Positive sales developments for most categories were partially offset by sales decreases in out-of-home channels and Infant Nutrition.

South Asia recorded double-digit growth, with positive contributions from Maggi, Nescafé and KitKat.

Sub-Saharan Africa grew at a double-digit rate, based on strong sales developments for Maggi, Milo and Nescafé. Japan posted mid-single-digit growth, led by KitKat and Starbucks products.

Sales in South Korea grew at a strong double-digit rate, driven by coffee. Oceania reported slightly negative growth due to a high base of comparison.

By product category, sales in culinary, dairy and coffee all grew at double-digit rates. Infant Nutrition posted slightly negative growth but gained market share in South Asia and Africa. Growth in confectionery and Nestlé Professional turned positive, led by China and Japan.

Mark Schneider, Nestlé CEO, commented:

“We are pleased with Nestlé’s strong organic sales growth in the first quarter, building on broad-based contributions from most geographies and product categories. Our growth was fueled by disciplined execution, enhanced digital capabilities and rapid innovation, resulting in further market share gains. Retail sales saw solid growth and out-of-home channels saw signs of improvement. We confirm our guidance for the year and our mid-term outlook for sustained mid-single-digit organic growth.

The development of COVID-19 vaccines has given the world hope and we are supporting the broad and equitable delivery of vaccines in the communities where we operate. Our partnership with the International Federation of the Red Cross and Red Crescent Societies is helping to get vaccines to those who need them most. In these challenging times, we can truly demonstrate how business can act as a force for good and help accelerate the recovery.”