Nestlé announced its full-year results earlier today, with the food giant reporting a 8.4% increase in reported sales, to CHF 94.4 billion (€95.62 billion).
Following that announcement, Nestlé chief executive Mark Schneider and CFO Francois-Xavier Roger took part in a media conference call, at which ESM was in attendance. Here are five takeaways from both.
1. Pricing To Continue To Drive Growth
While Nestlé didn't go into specifics on its pricing plans for 2023, Schneider indicated during the call that "most of the growth" this year is going to be pricing led – indicating that the company believes that cost inflation isn't going away any time soon.
Schneider did add, however, that increased pricing was not the reason for volume declines in the final period of the year, instead citing the return of normalisation of out-of-home, the continued impact of COVID-19 in China, and SKU optimisation.
On the inflation question, he added, "Going forward, it's important that we stay away from speculating about which commodity or where energy costs exactly are going to go. I think this is a little futile."
2. Frozen Food Is Here To Stay
There had been some speculation that the planned closure of Nestlé's frozen food arm in Canada would prompt the business to evaluate the future of its group-wide frozen operations – not so, according to the group.
As Nestlé explained, the cessation of frozen food in Canada, coupled with select dairy SKUs in Brazil, has freed up resources to invest in high-growth, high-margin products.
"Like any other sector, and like any other category, you have to be very targeted on where you have the best chance to win," Schneider explained during the media call, adding that extraneous circumstances in Canada regarding frozen food meant that the group "felt that it was better to withdraw from it".
3. Marketing Spend Set To Rise
Nestlé reduced its marketing spend in 2022, in keeping with other FMCG players, while spend was also influenced by supply chain issues in areas such as frozen food and pet care in the US.
During the media call, CFO Francois-Xavier Roger said that Nestlé has committed to "increasing [its] marketing spend significantly in 2023". While not mentioned, this may be aimed at offsetting the rise of private label, which continues to draw customers away from mainstream brands.
Read More: Nestlé Full Year Profit Misses Forecasts Despite Price Increases
4. Emerging Markets Perform Strongly
In emerging markets, Nestlé reported organic growth of 10% last year, compared to 7.1% in developed markets – a performance that helped to lift the overall group.
According to Schneider, Nestlé's business in emerging markets was "very resilient" last year, despite affordability issues, with the group's innovations resonating strongly with consumers.
"Our business had a slightly different composition between volume and mix [in emerging markets], with a little bit less volume than in the past and a bit more mix, but overall, we were very pleased with our performance," he added.
5. Pet Care Leads The Charge
Pet Care was the strongest performing category for Nestlé in 2022, with organic sales growth of 14.5% (the second strongest category, water, saw 11% growth). Pet Care accounted for 19% of overall sales last year, making it Nestlé's second-biggest segment
The group has cited 'science-based and premium brands' Purina Pro Plan, Purina ONE and Fancy Feast, as well as veterinary products, as the core drivers of this growth – with increased pet ownership numbers recorded during the pandemic also having a positive effect.
Read More: Nestlé To Hike Food Prices Further In 2023, CEO Says
© 2023 European Supermarket Magazine – your source for the latest A-brand news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
