- Nestle has announced it would reduce its fiscal 2016 guidance from 4% to 3.5% due to weak prospective sales growth in both developed and developing markets, Food Business News reported.
- Nestle reported sales of 65,514 million Swiss francs ($65.8 billion) for the first nine months of fiscal 2016, exceeding the prior year's sales of 64,863 million Swiss francs ($65.2 billion).
- The company attributes its sales growth decline to deflationary pressure from low commodity and market pricing.
Nestle has maintained a sales growth target of 5% to 6% the past few years, but has repeatedly missed it in most quarterly reports. Instead of waiting until the end of the year to make a change, Nestle chose to protect its share price and reputation by reducing its sales growth targets ahead of time.
5% to 6% annual sales growth is a challenging mark to hit, particularly for a manufacturer that has many of its products positioned on center store aisles. Sales growth for the general food market overall, which includes much of Nestle's portfolio, has been closer to 3%, according to a report from the Organic Trade Association.
Nestle may choose to adopt this 3.5% to 4% sales growth target as a more permanent benchmark. Besides some acquisitive growth, the company has also worked toward reformulating products to be better aligned with the values of health-conscious consumers. But these brands need to prioritize learning why consumers love a brand in a particular category and emulate successful strategies.