The Swiss food and beverage giant raised prices by an average of nearly 10% in its first quarter, with coffee products achieving sales growth globally amid a slowing of the at-home coffee market following the pandemic
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Nestlé reported 'positive sales developments' for its Nescafé, Starbucks and Nespresso coffee ranges during the first quarter | Photo credit: Nestlé
Nestlé has posted a resilient first quarter amid sustained high inflation and a challenging sales environment in many markets.
The Swiss food and beverage giant posted a 5.6% rise in sales to CHF 23.5bn ($26.5bn), with high single-digit growth for coffee and ‘positive sales developments’ for its Nescafé, Starbucks and Nespresso ranges across the group.
However, Nestlé raised prices across its product ranges by an average of nearly 9.8% in response to “ongoing pressures from two years of inflation” and posted 0.5% lower sales volumes for the period.
Meanwhile, e-commerce sales grew 13.6% to reach 16.2% of total group sales.
Nestlé’s North America business achieved sales of CHF 6.3bn ($7bn), up from CHF 5.8bn during the same period in 2022. Sales for Nestlé Professional and Starbucks out-of-home solutions grew at a strong double-digit rate, supported by distribution expansion.
The US beverages category, including Coffee mate, Nescafé and Starbucks products, posted high single-digit growth, Nestlé said.
In Europe, Nestlé reported 5.4% sales growth to CHF 4.9bn ($5.5bn), with high single digit growth for coffee supported by Nescafé and Starbucks products. Nestlé Professional, which includes the Starbucks We Proudly Serve and Nescafé out-of-home lines, saw sales grow at a double-digit rate.
In China, Nestlé saw sales decrease 3.7% to CHF 1.3bn ($1.5bn), with Nestlé Professional achieving mid-single-digit growth, supported by ‘innovation and distribution expansion’.
Nestlé’s Nespresso coffee pod business also saw sales decrease 2.2% globally to CHF 1.6bn ($1.8bn) as a result of ‘post-pandemic normalisation’ and the negative impact of foreign exchange on sales.
However, Nestlé cited its Vertuo system as a ‘key growth contributor’ for the coffee pod and systems manufacturer, with out-of-home sales boosted by adoption of the Momento system in offices.
Nespresso’s North America business posted double-digit growth with continued market share gains while Europe reported a sales decrease. Other regions combined saw low single-digit growth, Nestlé reported.
“Nestlé delivered strong organic growth in the first quarter, as our teams worked diligently to protect volume and ensure resilient mix... Portfolio optimisation efforts and responsible pricing helped to offset the ongoing pressures from two years of cost inflation,” said Nestlé CEO, Mark Schneider.
Looking to the year ahead, Nestlé said it anticipated 6-8% organic sales growth and a profit margin of 17-17.5%.