UK sales weak for Nestlé amid slow growth in Europe

By Rod Addy

- Last updated on GMT

Nestlé achieved strong growth in Europe in Spain, Portugal, France, Austria and the Netherlands
Nestlé achieved strong growth in Europe in Spain, Portugal, France, Austria and the Netherlands

Related tags Real internal growth Nestlé

Nestlé’s UK sales proved weak in the first nine months of 2014, although the global food giant still achieved low growth in Europe overall.

“Consumer confidence remains fragile in Europe and the environment made pricing hard to achieve,”​ said Nestlé in its results statement, issued today (October 16).

Western Europe grew, with Spain and Portugal, France, Austria and the Netherlands contributing to the growth, while the Great Britain region, Germany and Italy were weaker.

“Nescafé Dolce Gusto continued to grow well and soluble coffee and Nescafé Gold performed strongly in many markets. Frozen pizza continued its positive growth momentum, while ice cream had a challenging summer season in most of Europe.”

By contrast, Nestlé Waters delivered good growth in Europe, with brands such as Perrier, Vittel and San Pellegrino. Despite the cooler summer, Europe continued to show solid growth​,” Nestlé said. “The UK, France and Belgium were the highlights.”

Star performer

Central and eastern Europe saw some strong growth, with Russia being a star performer, delivering sales growth in ice cream and confectionery and double digit growth for Nescafé Dolce Gusto. Despite its broader troubles, Ukraine was also singled out for praise.

“In other parts of the region there was a mixed picture​,” said Nestlé. “Improved consumer sentiment in some markets helped sales, particularly in confectionery and coffee. The culinary category declined in several markets and poor weather affected ice cream.”

In Zone Europe, Nestlé posted sales of CHF 11.1bn (£7.3bn), representing 1% organic growth and 2% real internal growth. Despite the headwinds, growth in the zone was positive, driven by innovation and premiumisation,”​ it said.

In the US, despite struggles in frozen food, pizza, ice cream and confectionery performed well, while in Latin America, KitKat and ambient dairy products were the growth drivers.

Asia, Oceania, Africa

Some commentators highlighted the fact that political unrest in Asia, Oceania and Africa had hit sales, with growth slowing in this region. Despite this Nestlé said it remained confident of long-term prospects there and many markets had delivered good growth.

“From a category and brand perspective, Milo, Maggi, coffee, and tea and coffee enhancers contributed to the emerging market growth across the zone,”​ it said. “The Philippines, Turkey, Pakistan and many markets in Africa were strong performers.”

Nestlé Nutrition maintained good results in infant formula and infant cereals, with emerging markets delivering double digit growth.

Nestlé reported total sales down 3.1% to CHF 66.2bn (£43.8bn) in the nine month period, hit by currency fluctuations. Despite this, it reported overall organic growth of 4.5% and real internal growth of 2.3%.

“In a volatile global trading environment where there are no tailwinds, we achieved good broad-based growth,”​ said Paul Bulcke, Nestlé ceo. “Despite the tough environment, in view of our year-to-date performance, we are still aiming for organic growth of around 5% for 2014 with improvements in margins, underlying earnings per share in constant currencies and capital efficiency.”

Related topics Drinks Confectionery Dairy

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