Nestle finance chief Wan Ling Martello has insisted that the company remains “upbeat” on the outlook for the consumer environment in 2014.
“From what I understand, the sentiment [among some listed food companies] is very downbeat. We at Nestle do not feel that way. We are not arrogant – it is going to be a challenging environment – but that being said I think there are a lot of opportunities,” Martello said.
Speaking at the Consumer Analyst Group of Europe conference in London this week, Martello stressed that the outlook for consumer spending differed throughout Nestle’s geographies.
In the US, Nestle’s largest market, Martello said that cold weather was hitting consumer spending. “We never want to use the weather… but don’t forget for consumers, who are stretched and having to pay higher utilities, the discretionary income is that much smaller for the consumer base. So that is the challenge on top of everything else that is going on.”
However, in Europe, Martello said Nestle expects consumer sentiment to be resilient enough for Nestle to pass commodity price increases up the chain. “With increases in commodity costs… we do expect to be able to take some pricing in Europe for H2.”
Meanwhile, Martello stressed the growth opportunity presented by the emerging markets in Nestle’s Asia, Oceania and Africa region.
Last year, the company saw something of a slowdown in emerging markets – where growth nevertheless remained higher than Nestle’s business in mature markets. Zone AOA booked 5.6% organic sales growth and 4.8% real internal growth, which strips out the impact of pricing, during 2013. This expansion was driven by higher sales from premium products, Martello suggested.
“In emerging markets, in AOA for instance, last year our premium products were growing at about 20%. So our challenge in emerging markets is to accelerate the roll out of more premium products.”
Martello confirmed Nestle’s previously announced full-year sales forecast of 5%. “It is weighted in H2. And even in H1 it is weighted Q2. But having said that, the difference between H1 and H2 will not be as big as last year.”