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Brazil Christmas shipment change hurts Nestlé in Q3

By Oliver Nieburg+

19-Oct-2012
Last updated the 19-Oct-2012 at 16:37 GMT

Nestlé’s confectionery segment was shaken in the third quarter by a shift in Brazil’s Christmas confectionery shipment.

Roddy Child-Villiers, head of investor relations at Nestlé, said of the company's confectionery segment: “The quarter was impacted by the changed shipping pattern in Brazil, which is our biggest confectionery market, but growth picked up pace in Russia, the U.K. and Japan”

“Brazil had a slower third quarter as it has pushed its confectionery shipments for the Christmas season into the fourth quarter,” he continued.

However, he added that the Brazilian market was still able to grow sales in high single-digits for the past nine months.

Nestlé’s overall confectionery segment saw 5% organic growth in its nine-month sales reported yesterday CHF 7.2bn ($7.8bn). See HERE for the full results.

Growing Brazilian market

The Brazilian chocolate market is worth US$6.6bn and has grown 127% in the past five years, according to Euromonitor International.

Mondelez and Nestlé are the market leaders in Brazilian chocolate by some distance. Mondelez holds a 32% share and Nestlé 22%. The next biggest player is Argentinian confectioner Arcor on 7%.

Mars, Ferrero and Hershey have only a small share.

Nestlé’s Garato brand is the most popular chocolate product, followed by Mondelez’s Lacta brand.

Mondelez has identified Brazil as one of its priority chocolate markets along with India and Russia. See HERE .

Cocoa supply & Kit Kat launch

Brazil temporarily suspended imports from the world’s biggest cocoa grower Ivory Coast in August after bugs were found in a 10,000 ton cocoa shipment, according to reports.

Nestlé and Cargill were understood to have been the buyers of the bug ridden cocoa.

Nestlé also recently lost a court battle in Brazil and was ordered Nestlé to label all genetically modified (GM) ingredients for products in the country. See HERE .

Nestlé launched Kit in Brazil last year and spoke positively of the launch during yesterday’s media conference.

“When we launched Kit Kat in Brazil last year it became the top trending topic spot on twitter. In less than one hour it created 1.2bn hits,” said Wan Ling Martello, Nestlé’s chief financial officer.

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