Food and beverage strength spark Nestle sales growth

by Eric Schroeder
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VEVEY, SWITZERLAND — Consolidated sales of the Nestle Group reached 24,251 million Swiss francs ($20,000 million) during the first quarter of 2007, up 6% from the same period a year ago. The company’s core food and beverage businesses achieved organic growth of 7%, consisting of 5% real internal growth of 2% price increases.

"Nestle is off to a strong start, not least with an excellent performance of our food and beverage business," said Peter Brabeck-Letmathe, chairman and chief executive officer. "These encouraging figures reflect the acceleration of our move towards nutrition, health and wellness across our main food and beverages brands, as well as the strong performance of our globally managed Nestle Nutrition unit, which achieved its long-term target of 10% organic growth. Input costs remain high, but our strong brands enable us to continue to adjust prices. We therefore expect the group to reach its objectives of organic growth between 5% and 6%, as well as continued improvement of the EBIT margin in constant currencies in 2007.

"The acquisition of Gerber has further accelerated the transformation process and will give Nestle undisputed global leadership in nutrition, health and wellness."

In a breakdown of sales by product groups, Nestle powdered and liquid beverages posted first-quarter sales of 4,019 million Swiss francs, up 9% from the same period a year ago.

"Nescafe achieved high single-digit growth in the Americas and Zone Asia, Oceania and Africa," the company said. "In Europe, growth was driven by the value-added mixes segment, while the Nescafe Dolce Gusto launch has got off to a good start."

Nestle Waters posted strong 10% organic growth, to 2,322 million Swiss francs. The company pointed to strong returns from its Nestle Pure Life brand and the regional American brands such as Poland Spring and Ozarka.

"The performance of Nestle Waters reflects its success in positioning its product range as a healthy choice for the whole family," Nestle said.

Milk products, nutrition and ice cream also performed well, achieving approximately 7% organic growth. In the United States, CoffeeMate sales improved, with good performances from super premium brands such as Haagen-Dazs and Movenpick, as well as the successful roll-out of nutritionally enhanced products.

For the first time, Nestle said its Nestle Nutrition group achieved 10% organic growth during the quarter.

"The globally-managed business achieved strong growth around the world due to a continued focus on value-added innovation across its infant nutrition products and a particularly strong performance of health care nutrition," the company said. Making the growth more impressive was that it did not include any contribution from Jenny Craig or the recently announced acquisitions of Novartis Medical Nutrition and Gerber.

Looking at specific regions, Nestle’s European zone reported growth of 2% during the first quarter, with good performances in confectionery, soluble coffee, ice cream and chilled culinary products.

In the Americas, growth remained impressive at 7%. Pet care, confectionery, soluble coffee, culinary and ready-to-drink beverages did particularly well, Nestle said, with market share gains in most categories.

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