Nestlé has announced a 2% organic growth rate for the first nine months of 2024, with coffee emerging as the primary contributor to this increase.
CEO Laurent Freize stated, “We delivered organic sales growth, driven by positive real internal growth. However, consumer demand has weakened in recent months, and we anticipate that this soft demand environment will persist.”
In light of these conditions and the company’s ongoing efforts to reduce customer inventories in the fourth quarter, Nestlé has revised its full-year guidance. The company now expects organic sales growth to align with the 2% reported in the first nine months of the year.
Nestlé’s total reported sales for the period reached $77.5 billion (CHF 67.1 billion), a slight decline from $79.4 billion (CHF 68.8 billion) during the same period last year.
Overall, organic growth remained steady at 2% for the nine-month period, consistent with the 2.1% achieved in the first half of the year. The real internal growth (RIG) stood at 0.5%, reflecting challenges posed by declining consumer demand and hesitancy toward global brands, which is attributed to ongoing geopolitical tensions.
Coffee sales experienced the largest growth, with mid-single-digit increases largely fueled by Nestlé’s leading brands: Nescafé, Starbucks, and Nespresso.
Regionally, Nestlé reported a -0.3% organic growth rate in North America, although it gained market share in coffee despite losses in the coffee creamers segment. In contrast, Europe experienced organic growth of 3.3%, with coffee leading the charge, particularly through Nescafé soluble coffee and Starbucks products.
In Asia, Oceania, and Africa, organic growth reached 3.6%. Coffee sales in this region also showed mid-single-digit growth, driven by Nescafé, especially in ready-to-drink formats. China specifically reported 2.5% organic growth, bolstering market share in soluble coffee.
For Nespresso, organic growth was 1.8%, with North America achieving mid-single-digit growth and market share gains. However, Europe faced slightly negative growth in a competitive market. Nespresso’s growth was largely supported by its Vertuo system and strong sales momentum across various channels, including out-of-home consumption driven by the adoption of the Momento system.
As the company navigates the current consumer landscape and implements strategies to manage customer inventories in the fourth quarter, Nestlé has updated its full-year outlook. It now anticipates organic sales growth of approximately 2%, consistent with the first nine months, along with an underlying trading operating profit margin around 17%. Additionally, underlying earnings per share growth in constant currency is projected to remain broadly flat.
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