Nestle wants to go into more plant-based product categories.
For its plant-based products, Nestle SA is reporting double-digit organic sales growth. Incorporating additional categories beyond plant-based burgers may maintain the momentum, according to CEO Ulf Mark Schneider.
“There aren’t many opportunities to revitalize the food category,” he remarked during a fiscal year results conference call on February 18. We have a once-in-a-generation opportunity, and I believe we’re moving in the right direction.
According to him, the company’s sales of plant-based meat substitutes are close to 200 million Swiss francs ($223 million).
“However, the scope of the opportunity increases significantly when you consider how we can use these ingredients to create more alluring downstream products like frozen pizza with plant-based toppings, frozen meals, or other prepared dishes,” he stated. Then, at double-digit organic sales growth rates, we’re talking about nearly 700 million Swiss francs.
According to him, sales of plant-based dairy substitutes are expanding by double digit percentages and are just over 100 million Swiss francs.
Mr. Schneider remarked, “But once more, it’s an entry point to other areas that you can invigorate.” Consider ice cream. Confectionery comes to mind. It’s possible that some of you saw our announcement earlier this week regarding our vegan KitKat product. Therefore, these components are essential beginning points that will allow new products to succeed later on.
Fish substitutes made of plants offer yet another chance.
“We’re still scaling this up and can’t make it fast enough,” he said. “We had great success last summer with the product that a few people had on the radar screen, and that is plant-based tuna alternative, which has been one of the best-selling plant-based items in select European markets.”
Net profit for Nestle dropped from 12.61 billion Swiss francs in the previous fiscal year to 12.23 billion Swiss francs ($13.67 billion) in the 2020 fiscal year, a 3% decline.
Compared to the previous fiscal year’s 92.57 billion Swiss francs, sales fell 9% to 84.34 billion Swiss francs ($94.25 billion), but organic sales growth was 3.6%. The ongoing strengthening of the Swiss franc relative to most other currencies resulted in an 8% decrease in sales due to foreign exchange. The impact of divestitures was negative by 4.6%.
“Sales in retail remained strong throughout the year,” said Francois-Xavier Roger, executive vice president and chief financial officer. “In out-of-home, sales decline moderated in the second half of the year, stabilizing at around minus 26%. We remain cautious and expect continued headwinds for the out-of-home channels in the first half of 2020. Improvement in the out-of-home channel is expected to be gradual, with a recovery back to pre-COVID levels, at the earliest, in 2022.”
Nestle executives in 2021 expect organic sales to grow at a mid-single-digit rate. Nestle will exercise caution and patience when it comes to acquisitions this year, Mr. Schneider said.
“We need to stay selective,” he said. “Having said that, we do believe that in 2021 as well, we will see some good additions to our business.”
In its Americas zone in 2020, Nestle reported sales of 34.01 billion Swiss francs ($38.01 billion), down 10% from 37.83 billion Swiss francs. Divestitures reduced sales by 5%, largely related to the sale of Nestle’s US ice cream business to Froneri, which was completed in January of this year. Foreign exchange had a negative effect of 10%. Organic growth was 4.8%.
You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
While Purina PetCare was the largest contributor to sales growth, beverages, including Starbucks products, Coffee mate and Nescafé, posted double-digit growth. Frozen food, led by Stouffer’s DiGiorno and Hot Pockets, posted high single-digit growth.
Sales decreased 6% to 20.23 billion Swiss francs from 21.46 billion Swiss francs in Europe, the Middle East, and North Africa. Sales were down 2.1% as a result of divestitures, which were mostly caused by Nestle selling its 60% ownership of the Herta charcuterie company. The impact of foreign exchange was negative by 7%. The growth in organic sales was 2.9%.
Sales decreased 6% to 20.73 billion Swiss francs from 22.12 billion Swiss francs in Asia, Oceania, and sub-Saharan Africa. Growth in organic sales was 0.5%. Organic growth in other regions in the mid-single digits more than offset a decline in sales in China.
Sales in Other Businesses decreased from 11.16 billion Swiss francs to 9.38 billion Swiss francs, a 16% decrease. Sales were down 18% as a result of divesting Nestle Skin Health. There was a 6% negative impact from foreign exchange. There was 8% organic growth. Sales of organic Nespresso rose by 7%. Nestle Health Science experienced a 12% acceleration in organic sales growth.