CAGNY: Nestle eyes resurgence in US infant nutrition

By Michelle Russell | 21 February 2013

Nestle has been working to expand its infant nutrition sales team in the US

Nestle has been working to expand its infant nutrition sales team in the US

Swiss food giant Nestle has said it hopes to "come back strongly" in infant nutrition in the US, where it believes a "postponed birth spurt" could drive growth of the category.

Addressing analysts at the Consumer Analyst Group of New York conference yesterday (20 February), Roddy Child-Villiers, the company's head of investor relations, said the company has been working to expand its infant nutrition sales team in the US in a bid to boost growth in the division.

"Our Gerber brand has been a great success and we've clearly been expanding our team of people who deal with infant nutrition and it's going really well. Clearly we're handicapped because as you all know the birth rate in the US has fallen quite dramatically, albeit not in the Hispanic section, but in the US as a whole. But we're optimistic there is a postponed birth spurt so the market will come back and we will come back very strongly with the market."

Nestle last week reported an 11.8% increase in earnings, with operating profit up 11.7% on the prior year. Net sales climbed 10.2% in the period.

In infant nutrition, emerging markets, including BRICs and Africa, helped boost growth in 2012, with the unit recording double-digit growth in both formula and cereals. It also achieved growth in developed markets, despite low birth rates, with good performances in particular in France and the US, where it gained share.

The company has made a number of acquisition in this market, including Wyeth Nutrition, completed in November, and most notably its deal to buy the infant nutrition business of US pharmaceuticals group Pfizer in April last year.

Upon completion, Nestle's portfolio of infant nutrition brands with include Nan, Gerber, Lactogen, S-26 Gold, SMA and Promil.

Separately, Nestle was asked for its outlook on input costs heading through 2013, which Child-Villiers was also upbeat on.

"Historically we have guided on [input costs] and we said we wouldn't this year because there wasn't anything significant to guide on. We don't expect anything significant, so it's low-single-digit. We started guiding because we had this massive volatility and we wanted to help the market understand how we'd manage through that but when it's normal course of business stuff the guidance seems rather redundant."

Chris Johnson, executive VP for the US, Canada, Latin America and the Caribbean, reiterated this point.

"We don't see anything right now that would indicate a hugely volatile situation. I remember last year in the US in June looking at the corn crop and thinking, this is going to be a great year for grains, and there turned out to be a horrendous drought. You never know in these situations, but at this point, I would say we don't have any indication there is anything volatile that is about to happen."

Sectors: Baby food, Canned food, Cereal, Chilled foods, Commodities & ingredients, Condiments, dressings & sauces, Confectionery, Dairy, Dried foods, Financials, Frozen, Ice cream, Meat & poultry, Snacks

Companies: Nestle, Pfizer

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