Michelle Russell

On the money: Nestle says innovation "key" to growth in mature markets

By Michelle Russell | 9 August 2012

In North America, Martello highlighted Nestles challenges in the frozen pizza category

In North America, Martello highlighted Nestle's challenges in the frozen pizza category

Nestle has said innovation is key to growth in developed markets where the company says achieving higher sales is "no walk in the park".

This Swiss food giant this morning (9 August) saw its share price increase as it booked an increase in first-half profit and reaffirmed its full-year guidance.

In North America, where Nestle said consumer confidence continued to be low, several of the Kit Kat maker's food categories were under pressure including frozen food. Europe was an environment Nestle said had "deteriorated" during the year, particularly in the south. Real internal growth in both the US and Europe edged up 0.1% in the second quarter.

"It is interesting when you see results like the ones we just released," CFO Wan Ling Martello told analysts on the firm's earnings call. "By no means this is no walk in the park, these are hard fought numbers in the developed markets. In Europe it's both PPP [Nestle's low-price Popularly Positioned Products] and premium that are doing well.

"To be able to get the kind of numbers in developed markets where it's very challenging from a macro perspective, innovation is going to be key."

In North America, Martello highlighted Nestle's challenges in the frozen pizza category.

"The frozen aisle is continuing the trend as we have seen. The frozen pizza category unfortunately remains soft overall but our strong brands are enabling us to hold market share despite the significant pricing we have taken."

Martello, however, sounded an upbeat note on the remainder of the year for US and Europe.

"People always ask, what do we see for the balance of the year. For the US and for Europe, it's very hard to tell but what's very comforting for us is the fact that we do not see deceleration going forward and we are cautiously optimistic given our product categories and what we've seen in the first half."

Separately, Martello said the company would continue to look for acquisition opportunities, following its deal to buy the infant nutrition business of US pharmaceuticals group Pfizer for US$11.85bn in April, but not on a large scale.

"We have been very public since post the announcement of Pfizer nutrition that we will not be doing any significant deals and if anything we will look at bolt-on acquisitions here and there but no significant transactions post Pfizer."

Sectors: Baby food, Bakery, Dairy, Frozen, Ice cream

Companies: Nestle, Kit Kat, Pfizer

View next/previous articles

Currently reading -

On the money: Nestle says innovation "key" to growth in mature markets

There are currently no comments on this article

Be the first to comment on this article

Related articles

Editor's choice: the highlights on just-food last week

One story has dominated the industry headlines last week - the deepening and widening horse meat contamination, which has now taken in household brand Findus and a supplier in France. Beyond the debate over food standards and the scrutiny of the supply chain, Dairy Crest admitted it was struggling to find suitable M&A targets, Marks and Spencer said its Simply Food ambitions could lead them beyond France and further into Europe, while Kellogg insisted it was seeing improvement in its business in the region.

Quote, unquote: just-food's week in words

Few stories in recent months have caused as much comment as the horse meat scandal, which last week deepened with the news Findus lasagne sold in the UK contained the ingredient. Elsewhere, Dairy Crest said potential takeover targets wanted too much money, Nestle found another country looking at the implications of its Pfizer infant formula acquisition and Kraft Foods Group went to court over the Cracker Barrel trademark.

SOUTH AFRICA: Competition watchdog to assess Nestle-Pfizer merger

South Africa's Competition Commission will recommend the Competition Tribunal approve the South African leg of Nestle's global acquisition of Pfizer Nutrition, with a number of conditions, at a hearing tomorrow (6 February).

Read further items in this columns

On the money

Food companies discuss and dissect their latest results.

Welcome to the home of food information, insight & intelligence

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page