Starbucks ready-to-drink products and Nescafé instant coffee were key performers in Nestlé’s coffee category
Nestlé reported a 2% fall in sales for its Nespresso coffee pod division to $3.6bn | Photo credit: Mihai Varga
Nestlé has reported high single-digit sales growth for its coffee segment in the first half of 2023, with company-wide price increases contributing to modest group revenue growth.
The Swiss food and beverage giant said total sales in the six months ended 30 June 2023 grew 1.6% to reach CHF 46.3bn ($54bn).
Nestlé increased product prices by an average of 9.5% during the period, which it said reflected the impact of cost inflation over the last two years.
Alongside higher pricing, Nestlé said its coffee segment benefitted from a continued recovery in out-of-home channels to achieve high-single digit sales growth across all markets.
Wider distribution of Nestlé Professional and Starbucks out-of-home products saw the coffee segment achieve high single-digit revenue growth in North America – Nestlé’s largest sales region at CHF 12.5bn ($14bn).
In Europe, Nescafé instant coffee and Starbucks products were key contributors to the region’s 2% sales growth. Meanwhile, the roll-out of Starbucks ready-to-drink (RTD) products was credited with high single-digit sales growth for Nestlé’s coffee division across Asia, Oceania and Africa.
Coffee sales in Greater China increased by low single-digits, with instant coffee, Starbucks products and a strong second quarter recovery for RTD coffee highlighted as strong performers.
Nestlé increased prices for Nespresso products by 4% during the first six months of 2023, but reported a 2% fall in sales for its coffee pod division to CHF 3.1bn ($3.6bn).
“We pursued our strategic priorities with discipline and focus in a fast-evolving consumer environment. Based on the strong performance in the first half of the year we upgrade our organic sales growth outlook for 2023. At-home consumption post-Covid has now normalised, removing a growth drag on some of our categories. Out-of-home channels continue to see strong growth momentum. For the remainder of the year, we are confident that we will deliver a positive combination of volume and mix, an improvement in gross margin and a significant increase in marketing investments,” said Mark Schneider, CEO, Nestlé.
Nestlé has increased its full-year sales growth guidance from 6% to 7-8%, while its underlying trading operating profit margin is expected to be 17%.
The Swiss food and beverage giant announced two changes to its senior management team during the first half of 2023, with Stephanie Pullings Hart returning to the company to assume the Head of Operations role and Anna Manz joining as Nestlé’s new Chief Financial Officer.