Coffee helps Nestle brew up sales growth

Despite the overall climate of stagnant consumer spending in industrialised countries and a slowdown in growth in emerging markets, Nestle reported a 4.3 percent rise in sales in the first quarter of this year to 22.2 million Swiss francs ($22 billion, 19.4 billion euros).

Recent acquisitions accounted for 1.2 percentage points of that increase.

In recent years, the company has been under intense shareholder pressure to boost sales and profitability, and has been shaking up its portfolio that includes over 2,000 brands, including household names such as Gerber’s baby food, Perrier sparkling water and Haagen-Dazs ice cream in addition to its eponymous chocolate.

Nestle, which owns the Nespresso capsule and Nescafe instant coffee brands, has made coffee a key priority in its growth strategy, including the $7 billion acquisition last August of the rights to market Starbucks coffee outside of the chain’s cafes.

The group has in particular sought to expand its coffee presence in the United States, where it has bought a majority stake in California-based high-end brand Blue Bottle Coffee and acquired Texan brand Chameleon Cold Brew.

Chief Executive Mark Schneider highlighted the launch of a new range of 24 premium coffee products under the Starbucks during the quarter.

“The Nestle and Starbucks teams did an outstanding job and developed these products in just six months,” he said, adding that the company’s increased speed and innovation “are clearly paying off”.

The company confirmed its forecast for higher sales on a like-for-like basis and bigger operating profit margins this year.

The Swiss group wasn not completely impervious to the sluggishness in consumer spending, being able to increase its sales prices by only 1.2 percent in the quarter.