CoffeeNetwork (New York) – Nestle has reported its nine month sales for 2022.
Highlights include:
- Organic growth reached 8.5%. Pricing was 7.5%, reflecting significant cost inflation. Real internal growth (RIG) was resilient at 1.0%. Organic growth was broad-based across most geographies and categories.
- Total reported sales increased by 9.2% to CHF 69.1 billion (9M-2021: CHF 63.3 billion). Net acquisitions had a positive impact of 1.2%. Foreign exchange decreased sales by 0.6%.
- Portfolio management on track. In the third quarter, Nestlé Health Science completed the acquisitions of Puravida in Brazil and The Better Health Company in New Zealand.
- Full-year 2022 outlook updated: we now expect organic sales growth around 8%. The underlying trading operating profit margin is expected around 17.0%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
Sales in coffee grew at a high single-digit rate, with positive sales developments for Nescafé, Starbucks and Nespresso.
Zone North America
Organic growth was 11.2%, with pricing of 11.1%. RIG was 0.1%, with a high base of comparison in 2021 and supply chain constraints. Net divestitures reduced sales by 4.8%, mainly due to the divestment of the Nestlé Waters North America brands. Foreign exchange had a positive impact of 4.8%. Reported sales in Zone North America increased by 11.2% to CHF 19.1 billion. Sales in Nestlé Professional and Starbucks out-of-home products grew at a strong double-digit rate. Growth in the beverages category, including Starbucks at-home products, Coffee mate and Nescafé, was close to a double-digit rate.
Zone Europe
Organic growth was 7.1%, with pricing of 5.7%. RIG was resilient at 1.5%, following a high base of comparison in 2021 as well as supply chain constraints. Foreign exchange negatively impacted sales by 7.5%, reflecting the appreciation of the Swiss franc against the Euro. Reported sales in Zone Europe increased by 1.7% to CHF 14.0 billion. Sales in Nestlé Professional grew at a strong double-digit rate, led by beverages. Coffee posted low single-digit growth, led by Nescafé soluble coffee and continued strong sales developments for Starbucks by Nespresso.
Zone Asia, Oceania and Africa (AOA)
Organic growth reached 8.1%, with pricing of 7.0% and RIG of 1.1%. Foreign exchange reduced sales by 3.9%. Reported sales in Zone AOA increased by 4.2% to CHF 13.9 billion. South-East Asia posted mid single-digit growth, led by Nescafé, Maggi and KitKat, particularly in Malaysia. South Asia recorded double-digit growth, with market share gains and continued momentum for Maggi, KitKat and Nescafé. Japan reported mid single-digit growth, led by ready-to-drink Nescafé and Purina PetCare. Sales in South Korea grew at a double-digit rate, driven by Starbucks products and increased demand for KitKat. Oceania reported high single-digit growth, with particular strength for Nescafé and Maggi. Coffee posted high single-digit growth, with continued strong demand for Nescafé and Starbucks products. The Zone launched Starbucks ready-to-drink products in selected markets.
Zone Latin America
Organic growth was 12.9%, with pricing of 10.5%. RIG was resilient at 2.5%, following high single-digit growth in 2021. Foreign exchange had a positive impact of 3.6%. Reported sales in Zone Latin America increased by 16.6% to CHF 8.6 billion. Coffee reported broad-based double-digit growth, supported by Nescafé soluble coffee, Nescafé Dolce Gusto and the continued roll-out of Starbucks products.
Zone Greater China
Organic growth was 4.7%, with pricing of 2.6% and RIG of 2.1%. Foreign exchange had a positive impact of 2.4%. Reported sales in Zone Greater China increased by 7.2% to CHF 3.8 billion. Coffee posted high single-digit growth, led by Nescafé soluble coffee and Starbucks products.
Nespresso
Organic growth was 3.0%, with pricing of 4.9%. RIG was - 1.9% following double-digit growth in 2021 during the pandemic. Foreign exchange negatively impacted sales by 2.5%. Reported sales in Nespresso increased by 0.4% to CHF 4.7 billion.
Nespresso reported low single-digit organic growth, following double-digit growth in 2021, with consumption remaining above pre-pandemic levels. The Vertuo system saw further momentum, with broad-based contributions across geographies. During the third quarter, Nespresso launched Vertuo Pop, a new compact machine made with recycled materials, in a number of European markets. Growth was also supported by a further recovery in out-of-home channels, with continued expansion of the Momento system and improved sales development for the office segment.
By geography, North America posted double-digit growth with continued market share gains. Europe reported a sales decrease. Other regions combined recorded high single-digit growth.
Nestlé is on a path to gradually reduce absolute greenhouse gas emissions in its supply chain and to achieve net zero emissions by 2050. For that reason, the company is supporting the transition to a regenerative food system. With the Nescafé Plan 2030, the company is now executing on these ambitions through its largest coffee brand.
The Nescafé Plan 2030 is an integrated strategy that is meant to simultaneously reduce greenhouse gas emissions in coffee farming while boosting the incomes of coffee farmers through the implementation of regenerative agriculture. It builds on Nescafé's decade-long sustainability work. The brand will invest over one billion Swiss francs into the Plan by 2030 – an investment that is supported by Nestlé's regenerative agriculture financing.
Nescafé will work with coffee farmers to make the transition to regenerative agriculture by providing them with training, financial support and high-yielding coffee plantlets. Some of the regenerative practices that will be encouraged include:
- planting cover crops
- optimizing fertilization, including the use of organic fertilizers
- increasing the use of agroforestry and intercropping and
- pruning or replacing existing trees with disease and climate-change resistant varieties.
Nescafé will test, learn and assess the effectiveness of multiple regenerative agriculture practices, prioritizing the seven countries from which it sources 90% of its coffee: Brazil, Vietnam, Mexico, Colombia, Côte d'Ivoire, Indonesia and Honduras. Its goal, in line with the Nestlé Group's ambition for all key agricultural ingredients, is to source 20% of its coffee from regenerative agricultural methods by 2025 and 50% by 2030.
Regenerative farming will improve soil health and fertility. Healthier soil holds more water and captures more carbon from the atmosphere. This will help Nescafé reduce its greenhouse gas emissions by 50% by 2030, in line with the Nestlé Group commitment.
Nescafé will simultaneously help boost the income of farmers who make the transition to regenerative agriculture. It will pilot a financial support program in selected countries to test the best approach according to local conditions. Some of the measures that may be used include: conditional cash incentives for the adoption of regenerative agriculture practices, income protection through weather insurance and greater access to credit lines for farmers.
Nescafé will track the progress and assess the results of its field programs through its Monitoring and Evaluation partnership with the Rainforest Alliance. It is also partnering with Sustainable Food Lab, among others, for topics related to coffee farmers' income assessment, strategy and progress tracking.
With this extensive Plan, Nescafé aims to help make coffee farming globally more sustainable.
Outlook
Full-year 2022 outlook updated: we now expect organic sales growth around 8%. The underlying trading operating profit margin is expected around 17.0%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
Alexis Rubinstein
Nestlé Reports Nine-Month Sales for 2022, Coffee Sees Growth 
