| Switzerland

At-home coffee cushions the cost of Covid-19 for Nestlé

Swiss food and beverage giant reports group sales decreased 8.9% to CHF84.3bn, ($94.1bn) in 2020, down from CHF92.6bn ($103bn) in 2019 – but at-home coffee products enjoy ‘robust’ sales growth around the world

Nestlé has enjoyed strong sales of its at-home coffee products during the global pandemic | Photo credit: Nestlé

In its full-year results for 2020, Nestlé acknowledged ‘hardship’ across its operations due to the global pandemic. However, despite incurring additional Covid-19-related costs of CHF420m ($420m), the Swiss food and beverage giant still reported group profits of CHF12.2bn ($13.6bn).
Nestlé said there had been ‘strong consumer demand’ for its at-home coffee products globally during 2020, with its Nescafé and Starbucks ranges experiencing ‘mid-to-single digits’ sales growth, and the latter generating sales of CHF2.7bn ($3bn).
Nespresso sales reached CHF5.9bn ($6.6bn), with organic growth of 7% – the highest in six years – the company said, with North America becoming the premium coffee capsule brand’s largest market. Meanwhile, e-commerce coffee sales and the Virtuo capsule system enjoyed ‘strong double-digit growth’ to ‘more than offset’ out-of-home channels sales declines.
“In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability, and return on invested capital,” said Nestlé CEO, Mark Schneider.
“Looking to 2021, we expect continued improvement in organic growth, profitability and capital efficiency in line with our value creation model,” he added.
The strong performance of its coffee products will be welcome news for Nestlé, which in 2018 paid Starbucks $7.1bn for exclusive rights to sell Starbucks products, including Reserve, Teavana, Starbucks VIA and Torrefazione Italia packaged coffee.

The Swiss company’s investment in its at-home coffee capabilities has been particularly fortuitous given extraordinary trading challenges brought about by the global pandemic, which has seen sales of at-home coffee ranges soar as consumers stay home due to Covid-19 restrictions globally.

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