- Nestlé's organic sales increased 2.9% in the third quarter, pushed up by general momentum in North America, and business successes in infant nutrition and coffee. The Swiss CPG giant's total sales in the nine month period were up 2% to 66.4 billion Swiss francs ($66.9 billion), according to a company release.
- North America showed 1.4% organic growth in the last nine months. Prices increased in the third quarter, reflecting higher commodity and freight costs. The North American arm saw solid growth in Purina petcare, Coffee-Mate creamers and coffee — specifically through e-commerce. Ice cream also grew at a single-digit pace in the third quarter, buoyed by Outshine and Häagen-Dazs.
- CEO Mark Schneider said in the company's earnings release Thursday that Nestlé's progress this quarter keeps the company on track for accelerated value creation. "Our growth was supported by disciplined execution and faster innovation," he said.
The company's big strategy shifts and M&A this year seem to be paying off. As consumer tastes have changed, Nestlé has remade itself to stay competitive. The world's largest food company has worked hard to shed its reputation as just a chocolate brand — and so far it's led to sales growth and expanded reach in the market. Coffee, Purina petcare, infant nutrition and Nestlé Health Science segments all saw positive growth during the period.
Overall, Nestlé says it has continued to position its portfolio toward "attractive high-growth categories." Major acquisitions — including the $7.15 billion purchase of the license to sell Starbucks coffee beans and drinks in grocery stores and the $2.3 billion purchase of vitamin company Atrium Innovations — pushed sales growth 0.1%. While that isn't large growth, it's balanced by large divestments, including last year's sale of its U.S. candy business, including brands such as Butterfinger, Baby Ruth, Crunch and 100 Grand.
Nestlé's investment in coffee continues to prove fruitful since the space continues to grow. In addition to the Starbucks deal, the company recently took a stake in coffee chain Blue Bottle and bought Chameleon Cold-Brew. Earlier this month, Daniel Jhung, president of Nestlé's USA beverage division, told Food Dive that the company was adding more resources to that segment to make sure that it is well represented in all facets of the field.
Sales this quarter were also boosted on the back of price increases — up about 0.6% in the Americas, the report says. Analysts and the company had expected Nestlé's organic growth to increase because of these increases. Additionally, sales strengthened as a wave of inflation in many markets emboldened Nestlé to raise prices.
The growth is good news for Schneider, since the company has recently faced pressure from activist investor Daniel Loeb. His investment firm Third Point took a 1.25% stake in Nestlé last year, valued at about $3.5 billion. In the last year and a half, following its own inclination to improve its top line, Nestlé has focused capital spending efforts on high-growth food and beverage categories. In recent months, Schneider has continued this focus, announcing the sale of the Gerber Life Insurance business for $1.55 billion, and is considering selling Nestle’s skin health business.
While profits aren't rising as steeply as they were in the previous financial quarter — when they were 19% higher, reaching $5.8 billion — this report shows Nestlé is still on an upward path.
"Our growth and efficiency initiatives put us on track to meet our full-year 2018 guidance and 2020 targets," Schneider said in Thursday's earnings report.
Aside from coffee, Nestlé also has recently become a major player in trendy plant-based foods. It recently purchased Sweet Earth frozen foods and a majority stake in Terrafertil, a Latin American company. While the segment didn't seem to have a large impact on this quarter's earnings, they are likely to continue to play a large role in Nestlé's financial future. But for now, the company's big strategy shifts to change the overall direction of the company seem to be proving successful.