28 April 2020 | Switzerland

Strong global demand for coffee at-home boosts Nestlé’s Q1 sales

Swiss food and beverage giant posts best quarterly sales growth in five years as consumers stockpile food essentials and coffee during the coronavirus pandemic – but Nestlé Professional foodservice business suffers steep sales decline following the closure of cafés, bars, and restaurants globally

A Nescafé Dolce Gusto production line in Montes Claros, Brazil



Nestlé has reported strong retail demand for food and beverage products globally, achieving 4.4% organic group sales growth in the first quarter of 2020. Coffee sales were particularly robust as consumers stockpiled essential items during the pandemic, the Swiss-based firm said.
 
In the US, Nestlé reported beverage sales, including its Starbucks, Nescafé and Coffee Mate coffee ranges, grew at a ‘high single-digit rate’, contributing to 7.4% organic sales growth across its Americas (AMS) business. Coffee sales also saw significant growth in Mexico and Brazil, Nestlé said.
 
In Europe, the Middle East and North Africa, (EMENA), Nestlé achieved 7.1% organic sales growth. Germany, Russia, Israel, and Spain posted ‘particularly strong’ growth, Nestlé said, with branded retail coffee products contributing to the positive performance.
 
However, in China, where coronavirus lockdown measures were implemented earliest, a double-digit sales decline, particularly across out-of-home channels, contributed to 4.6% drop in sales across Asia, Oceania and sub-Saharan Africa (AOA). Sub-Saharan Africa, however, bucked the trend to achieve ‘double-digit’ growth, supported by strong coffee and formula milk sales.
 
“Our company remained resilient in the first quarter, reflecting our diversified product portfolio and our strong local presence in 187 countries. However, this crisis is far from over and we will face many uncertainties in the coming quarters,” said Nestlé CEO Mark Schneider.
 
Reflecting the surging adoption of grocery delivery in locked down economies around the world, Nestlé reported e-commerce sales grew 29.4% in the first quarter to exceed 10% of total group sales for the first time.
 
While food essentials coffee at-home sales have been boosted by increased consumer demand during the pandemic, Nestlé’s commercial food and beverage supplier business, Nestlé Professional, and its Nespresso boutique stores suffered steep double-digit sales declines as lockdown measures forced consumers to stay at home.
 
Acknowledging the adverse impact coronavirus was having among its café and restaurant customers, Nestlé said it was launching a CHF500m ($513m) support programme, including the extension of payment terms and suspension of coffee machine rental fees.
 

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