Nestlé raises guidance after coffee demand boosts first-half results

Nestlé has reported organic sales growth of 8.1% for its first half, after its results were boosted by strong demand for its coffee products.

Following a strong performance in the first six months of the year, the Swiss food giant has raised its full-year organic sales growth guidance to 5-6%.

For its first half, the company’s total reported sales stood at CHF 41.8 billion ($46 billion approx.), representing a 1.5% increase on last year’s CHF 41.2 billion figure.

By product category, coffee was the biggest contributor to organic sales growth, with the first half seeing strong demand for the Nescafé and Nespresso brands, as well as Starbucks products, which were up 16.7%.

Earlier this week, Nestlé announced that it was expanding its coffee partnership with Starbucks, in a move to bring branded ready-to-drink coffee beverages to new markets.

Vegetarian and plant-based food offerings saw strong double-digit sales growth – led by the Garden Gourmet brand – while confectionery also recorded double-digit growth. Meanwhile, both dairy and prepared dishes and cooking aids posted high-single-digit growth.

Sales in Nestlé Health Science grew 13.6% on an organic basis, reflecting strong demand for vitamins, minerals and supplements, as well as healthy-ageing products.

With the acquisition of The Bountiful Company’s core brands, announced earlier this year, Nestlé is aiming to create a “global leader in vitamins, minerals and supplements”.

Meanwhile, lower birth rates in the context of the pandemic impacted infant nutrition, which saw a sales decrease.

Water returned to positive growth, on an organic basis, and the first half saw Nestlé complete its acquisition of functional water brand Essentia Water and the sale of its Nestlé Waters North America unit.

By channel, e-commerce sales grew by 19.2% but organic growth was strongest in out-of-home channels – at 21.3% – as coronavirus-related restrictions eased in some markets.

According to Nestlé, growth was broad-based across most geographies. Nestlé’s Zone Americas unit posted organic sales growth of 7.6%, while reported sales decreased by 3.1%, reflecting the impact of currency and divestitures.

Nestlé’s Europe, Middle East and North Africa (EMENA) unit recorded organic sales growth of 7.3%, supported by “successful innovation” and strong momentum in e-commerce.

Meanwhile, organic growth was 6.8% year-over-year for Nestlé’s Zone Asia, Oceania and sub-Saharan Africa (AOA) unit in the first half, with categories including coffee, confectionery and culinary gaining market share.

Nestlé CEO, Mark Schneider, said: “Organic growth was strong across most geographies and categories, with robust momentum in retail sales and a return to growth in out-of-home channels.

“Through fast-paced innovation, strong brand support, increased digitalisation and stringent portfolio management we have built the foundation for delivering consistent mid-single-digit organic growth for years to come.”