The brand story

Nestle 2011 Revenue Gains, Boosted by Nespresso Coffee

Nestle SA, the world’s biggest food company, reported 2011 sales growth that beat analysts’ estimates as consumers bought more Nespresso coffee capsules and KitKat bars.

Sales rose 7.5 percent excluding acquisitions, disposals and currency shifts, the Vevey, Switzerland-based company said today in a statement. That compares with the 7 percent average estimate of 12 analysts surveyed by Bloomberg. It’s the second year in a row that Nestle has beaten its long-term sales growth target of 5 percent to 6 percent.

Nestle has developed Maggi Juicy Roasting cooking aids and Dreyer’s smoothies to counter weakening consumer sentiment in North America and Europe. The company has also passed on higher raw-material costs to consumers in the form of increased prices.

“It was a challenging year, and we do not expect 2012 to be any easier,” Chief Executive Officer Paul Bulcke said in the statement.

Nestle said it expects organic sales growth in 2012 to meet its long-term target of 5 percent to 6 percent. The maker of KitKat chocolate bars also aims to widen its so-called trading operating profit margin and to boost underlying earnings per share at constant currencies.

Consumer Mood

“The figures look better than expected and there seems to be an acceleration in the Americas in the fourth quarter, which is a positive and indicative of improved consumer mood,” said Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich. “The outlook statement is as expected.”

Nestle’s trading operating margin widened 0.6 percentage point in 2011 to 15 percent. Net income from continuing operations rose to 9.49 billion francs from 8.78 billion a year, tempered by a strong franc, which reduced the value of sales generated in other currencies. The dollar was on average 15 percent lower against the franc last year, while the euro was down 11 percent.

The food company last week unveiled the Alegria coffee machine, which is designed for small businesses such as hairdressers and florists. Nestle has developed a range of beverage systems including the Viaggi super-premium coffeemaker and Special.T tea machines to tap demand for drinks. Sales of Nespresso rose more than 20 percent in 2011.

PepsiCo Inc., the maker of Frito-Lay chips and Quaker oats, said last week profit will decline about 5 percent this year on a constant-currency basis as it cuts 8,700 jobs and boosts marketing spending. Danone, the world’s largest yogurt maker, yesterday forecast like-for-like sales to rise 5 percent to 7 percent in 2012 and said European consumer sentiment won’t improve.

(Bloomberg)

• Six tips for suppliers dealing with retailers
• 6 Sure Ways to Increase Sales
• Tips to do marketing on a limited budget
• Tools and Techniques of Financial Statement Analysis
• The Power of a Good Brand Story
• How to Build Your Marketing Budget
• The Differences Between Coaching & Mentoring
• How to design a good distribution system?
• Distribution System
• Tips for effective coaching