Strong coffee demand fuels Nestlé’s half-year sales growth

Nestlé's headquarters in Vevey, Switzerland | Photo credit: Nestlé

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Reporting its financial results for the six months ended 30 June 2021, Nestlé said total sales increased 1.5% to CHF 41.8bn ($46bn), compared to CHF 41.2bn ($45.7bn) for the same period in 2020.
 
The positive results were fuelled by ‘strong demand’ for Nescafé, Nespresso and Starbucks products, the Swiss food and beverage giant reported. Starbucks-branded coffee products posted 16.6% sales growth over the period, with sales reaching CHF 1.4bn ($1.54bn) across 79 markets.
 
E-commerce sales grew 19.2% during the period, reaching 14.6% of total group sales, with strong momentum in most categories, particularly coffee, the company also noted.
 
Nestlé is reaping the rewards of the $7.1bn deal it signed with Starbucks in 2018 to exclusively market and distribute the latter’s branded retail coffee products around the world. In July 2021, the Global Coffee Alliance announced it would begin selling Starbucks-branded ready-to-drink (RTD) coffee products across Southeast Asia, Oceania and Latin America by 2022.
 
“The expansion of our partnership with Starbucks into ready-to-drink coffee will open new opportunities in a fast-growing segment. Our portfolio choices, strong execution and decisive actions on sustainability enable us to create value for all stakeholders,” commented Nestlé CEO Mark Schneider on the results.
 
Nestlé’s Nespresso premium coffee pod brand also performed favourably during the period, posting a 14.3% sales increase to CHF 3.2bn ($3.5bn). Growth was driven by the continued expansion of its Vertuo system and ‘robust’ demand for the original system. Growth was also ‘fuelled by new consumer adoption, a return to positive growth in boutiques and out-of-home channels, as well as innovation’, the company wrote.
 
In March 2020, Nespresso signalled it would pursue an ‘omni-channel’ strategy following Covid-19 disruption to its boutique store business, unveiling a new flagship store concept in Vienna, Austria, designed to ‘bridge the gap between offline and online retail'.