Chocolate proving winner for Nestle

21-Oct-2009 - Last updated on 22-Oct-2009 at 12:31 GMT

Growth in sugar confectionery weakened but the chocolate sector continued to perform well for Nestlé, according to the global food giant’s third quarter results.

The manufacturer said sales of its chocolate brands including Kit Kat continued to rise, and while it noted that demand was weak in Russia, it said that many emerging markets, particularly Turkey, India and Chile, delivered strong growth.

The group added that its core chocolate brands gained momentum in the US.

The confectionery sector overall recorded sales of CHF 8.2bn (€5.5bn), with nine month sales up four per cent, reported the company.

The food group said its global sales slipped 2.3 per cent to CHF 79.5bn (€52.6bn), undermined by a strong Swiss franc and overall organic growth - which excludes effects from acquisitions and currency fluctuations - stood at 3.6 per cent for the period.

Cocoa market investment

While releasing the third quarter results today, the company launched its Nestlé Cocoa Plan, which is aimed at supporting cocoa farmers to increase production in order to tackle the hike in global prices.

The group added that it plans to invest CHF 110m (€109m) on initiatives for the cocoa sector over the next 10 years.

In the last 20 years, worldwide chocolate consumption has doubled. Over the last five years alone, global consumption has increased 14 per cent. However, for the fourth consecutive year, there has been a worldwide shortage of cocoa beans versus consumption, which is forcing cocoa prices up to 29-year highs.

Tree provision

Petraea Heynike, executive VP of marketing and sales at the group, said that with Nestlé’s re-opened R&D Centre in Abidjan in the Ivory Coast, the company is working at all stages of the cocoa cycle to enhance quality, productivity and sustainability.

“Over the last 30 years, at our research centre in Tours, France, we have developed the expertise to propagate higher-quality cocoa and coffee plantlets on a broad scale.

These plantlets help farmers rejuvenate their crops and increase productivity by replacing old, low-yield, disease-prone trees,’ she continued.

The company said, over the next 10 years, it will provide a minimum of 38 million more plantlets to producer countries and in addition, educate producers in best practices.

And Heynike said the firm will communicate its Cocoa Plan on Nestlé confectionery packaging around the world.