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Nestlé's global sales boosted by coffee products and Starbucks partnership

Swiss food and beverage giant posts 4.3% rise in total sales for the first quarter of 2019 to $22bn (£16.8bn), with coffee cited as a key performer globally

Left to right: Mark Schneider, Chief Executive Officer, Nestlé S.A., Paul Bulcke, Chairman, Nestlé S.A.

Nestlé’s coffee-focused strategy appears to be generating growth, with the category contributing to sales increases across its business globally. The first three months of 2019 saw total sales increase 4.3%, with acquisitions, including the license to market Starbucks products, accounting for a positive impact of 1.2%.

The results will be welcomed by Nestlé, which has positioned coffee as a central part of its global growth strategy, notably with the completion of its $7.15bn consumer product partnership with Starbucks, which launched its first products in February 2019.

"We are pleased with Nestlé’s solid organic sales growth in the first quarter, building on our full-year 2018 momentum. Our increased speed, innovation for a changing world and execution focus are clearly paying off,” said Nestlé Chief Executive, Mark Schneider.

"In the quarter, we announced the launch of a new range of 24 premium coffee products under the Starbucks brand. The Nestlé and Starbucks teams did an outstanding job and developed these products in just six months,” he added.

Nestlé reported its Americas business achieved 3.4% organic growth, and credited its beverages category, comprising Coffee-mate creamers, Starbucks and Nescafé, as key contributors to ‘mid-single-digit’ growth in North America. Nespresso was also highlighted as having ‘very strong momentum’ across the Americas, with the Nescafé Origins brand enjoying ‘strong demand’ in Mexico. Nestlé also credited coffee products, including its ready-to-drink (RTD) range as strong contributors across China, South-East Asia, sub-Saharan Africa. Japan, however, was experiencing ‘softness’ in the coffee category, according the report.

Along with the acquisition of US specialty coffee chain, Blue Bottle, Nestlé’s ‘global coffee alliance’ with Starbucks is part of a strategy to counter the growing influence of other large players in the at-home coffee segment. In June 2018, German-owned JAB Holdings completed a $18.7bn merger of its Keurig Green Mountain-Dr Pepper business, creating the third-largest beverage company in the US. The global conglomerate is also rumoured to be considering an IPO for its coffee division within the next 2-3 years.

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