Dive Brief:
- Nestlé is “not happy” with its recent performance in North America, with CFO Anna Manz telling a Barclays conference that “more needs to be done” to improve execution in the region.
- The finance chief said creamers and its infant and child brand Gerber are two areas that are “underperforming,” while frozen food is seeing slower growth across the category.
- Manz noted that while consumer sentiment in North America remains weak, there has been no "material change" in their spending.
Dive Insight:
Despite its position as the world’s largest packed food maker, Nestlé is facing headwinds across some parts of its sprawling operation.
The company's creamer business, which includes Coffee mate, faced production issues during the latest quarter, a development Manz said “annoys” her and “really isn’t acceptable.” Nestlé has taken steps to improve output and so far is seeing progress.
Within Gerber and frozen foods, Manz said the company is shifting its strategy to take advantage of emerging trends and cater to rising demand for convenience.
In the case of frozen, there are pockets of growth to be found in world cuisines, high fiber and protein as well as different pack sizes, including both small and family value packs.
Gerber, meanwhile, has long been a struggling brand for Nestlé. CEO Philipp Navratil told analysts in February the 100-year-old brand was “a drag in terms of market share, and we’re still not where we should be.”
In an effort to revitalize the brand, Nestlé recently announced it was bringing Gerber into the pediatric rehydration space to expand the infant and toddler brand beyond its core meals segment.
During its second quarter, Nestlé posted organic sales growth of 2.8% in Zone Americas, reporting $11.69 billion (9.54 billion francs) in sales. Overall, company-wide sales in the period totalled $26.7 billion.
Nestlé has been aggressively pruning its portfolio for years while boosting innovation within categories it feels have the potential for growth.
This year alone, it has sold its mainstream vitamins, minerals and supplements business, divested half of its premium waters portfolio and offloaded the remainder of its ice cream business.
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