Nestlé is optimistic it can achieve organic growth of 2% or more for the Swiss food giant’s EMENA operations as it plans further product launches in the meat-free category in Europe.
Marco Settembri, the division chief of Nestlé’s operations in Europe, Middle East and North Africa, was addressing the Deutsche Bank Global Consumer Conference in Paris today (11 June), where he spoke about organic growth and any possible impact from Brexit. He also provided colour on Nestlé’s plant-based Incredible Burger, which launched in Europe earlier this year.
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Nestlé’s sales in EMENA rose 1.9% on an organic basis in 2018, slowing from 2.1% the previous year but faster than the 1.4% pace seen in 2016. The print for the group as a whole was 3% in 2018, following six years of slowing organic growth.
When questioned whether Nestlé can be a 2% growth business in the region, Settembri was generally positive, but he made reference to disruptive conflicts in the Middle East and tensions within eastern Europe that could potentially present barriers going forward.
“We are equipping ourselves to win market share,” Settembri told the conference. “We have huge growth in other parts of this region [EMENA], but on the other hand, you have other opportunities that you cannot capture,” he said in answer to the organic growth question. “So really it depends on what is happening in the future with Brexit, what is happening with the Russia tension in eastern Europe. You cannot bet on these things.
“Having seen all the elements, I think 2% average growth is something we can continue, but I would say hopefully we are equipping ourselves to do more.”
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By GlobalDataSettembri was upbeat about the risks posed from Brexit, and how the EU and the UK need to find the right agreement for the benefit of both parties.
He pointed out how the UK is one of Nestlé’s biggest businesses in the EMENA area, particularly in confectionery, coffee and pet care. But he noted – in reference to possible import duties when the UK officially leaves the EU – how the company was “absolutely self-sufficient”.
“Nobody knows what is going to happen in the future,” he stated. “Whatever will happen, we don’t really see any disruption in the business and business will continue. Of course we need to see what is going to happen to the currencies and so on, because that would be an impact. I don’t believe there will be a crisis like we had in other countries. We can go on in an exit scenario.”
On the category front, Nestlé launched its Incredible Burger in April in select countries across Europe as demand rises for meat-free alternatives due to consumer concerns about health and the environment.
The Incredible Burger is on the menu at fast-food giant McDonald’s in Germany, although Settembri said the company is in talks with other out-of-home operators. Nestlé has the capacity to cope with an extension of the meatless brand beyond the German market, he added.
“We invented the Incredible Burger, and this is just the first of a series of products that we are starting or have already introduced to the market place,” he said. “And it’s something that’s creating a big buzz and now it’s huge.”
He was asked if Nestlé risks “cannabilising” its existing business by entering the meatless category through its Garden Gourmet brand, and eventually launching a meat-free burger in the US this year under the Sweet Earth business. Earlier in the year, Nestlé had also revealed plans to speed up the sale of its Herta meats business.
“I don’t see cannabilisation,” he replied. “We are not really in the meat business, we are in the solutions business.”
