Nestlé lowers yearly organic sales growth outlook while coffee and pet food gain ground

25 Jul 2024 --- Nestlé has adjusted its organic sales growth outlook for the year from 4% to 3% after pricing came down faster than expected, the company has revealed in its first half-year results for 2024.

While the Swiss multinational also reported organic growth — driven by Europe and emerging markets — of 2.1% with positive real internal growth of 0.1% for the first half of the year and 2.2% for the second quarter, the company outlines that it is important to be cautious in the face of consumers being more cost-conscious.

Mark Schneider, Nestlé CEO, says the company delivered improved volume and mix growth across the group in the second quarter and shared that Nestlé Health Science is recovering as planned and is set for “a strong second half.”

“Looking ahead to the remainder of the year, we will continue to drive real internal growth by launching innovations that address consumer trends and growing our large iconic brands,” he says. “At the same time, we have seen pricing come down faster than expected. Therefore, we consider it prudent to adjust our guidance for the year, with organic sales growth now expected to be at least 3%.”

Growth contributors
Nestlé’s underlying trading operating profit decreased by -0.8% to CHF 7.8 billion (US$8.8 billion). However, its underlying trading operating profit margin increased to 17.4%.

Nestlé’s KitKat cocoa bars aim to raise awareness about sustainability. (Image Credits: Nestlé).  Coffee was the largest organic growth contributor, with mid-single-digit growth supported by its three leading global coffee brands: Nescafé, Nespresso and Starbucks. PetCare delivered mid-single-digit growth, driven by science-based premium brands Purina Pro Plan, Fancy Feast and Purina ONE.

Nestlé says Purina PetCare sales were driven by “differentiated” and “expanded” offerings in Europe and North America.

By channel, organic growth in retail sales was 2.0%, and E-commerce sales grew by 10.6%, reaching 18.2% of total group sales. Organic growth of out-of-home channels was 3.8%.

Meanwhile, dairy posted close to flat growth, as dairy culinary solutions delivered robust growth, offsetting a sales decline in coffee creamers and ambient dairy.

Sustainability ventures
The company introduced the first-ever KitKat bars made with cocoa grown by income accelerator farming families earlier this year. The bars aim to raise consumer awareness about the sustainability of the cocoa used in them and to build consumer trust by showcasing the traceability of Nestlé’s cocoa.

Earlier this year, the food giant said it expected a slow start to 2024. It reported a sales decrease of  5.9% versus Q1 2023, falling to CHF 22.1 billion (US$24.2 billion).