Nestle can capitalise on weakening consumer sentiment in developed markets by pushing the sale of its cut-price “popularly positioned products”, the CEO of the Swiss food giant has claimed.
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The company, the world’s largest food maker, said its PPP range – first targeted at consumers in economic economies – had become increasingly popular in recent months in Western markets hit by the downturn.
Nestle’s PPP portfolio includes cheaper versions of brands like Nescafe coffee and Nido milk powder and CEO Paul Bulcke said demand for the lines was on the up in developed markets.
“The whole dynamics we have behind PPP are very timely in the situation we have today,” Bulcke told reporters at Nestle’s HQ in Vevey, Switzerland, yesterday (19 February).
“It is not only in the emerging markets; it is a fact also that we have seen, and are introducing, the same concepts into the developed world.”
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By GlobalDataBulcke highlighted France and the US as two markets into which Nestle had pushed its PPP portfolio to low-income consumers, as well as to specific ethnic groups.
Sales of Nestle’s PPP lines jumped 27% last year, growth that Bulcke said gave Nestle confidence in the company’s outlook.
“The nice thing about [PPP] is that [consumers] are still with our brands. People may trade down but they stay with our brands. That’s why we are saying we believe in growth for next year,” Bulcke explained.
Announcing its 2008 results yesterday, Nestle said it would look to post sales growth “at least approaching” 5% on an organic basis and an improvement in EBIT margin at constant currencies.
“The unchanged EBIT guidance and the minimum 5% organic growth is reassuring,” James Amoroso, director and consultant at Amoroso Strategic Insights, said. “Nestle management is clearly confident about its ability to weather whatever 2009 may have to throw at the company.”
