Nestlé commits to confectionery after ‘slightly negative’ growth in 2020

Nestlé CEO Mark Schneider has confirmed the company’s commitment to its confectionery business, even though growth in the category was “slightly negative​” with reduced demand for impulse, seasonal and gifting products.

The global pandemic did not slow us down. Our nutrition expertise, digital capabilities, decentralised structure and innovation engine allowed us to adapt quickly to changing consumer behaviours and trends -- CEO Mark Schneider​

Schneider was speaking to journalists and analysts on an earnings call after the Swiss-based company posted full-year results for 2020 on Thursday 18 February. He said the lower-than-expected sales in confectionery were partially offset by strong momentum in baking products on tablets.

Plant-based

Nestlé’s plant-based dairy alternatives showed double-digit growth last year, slightly ahead of CHF 100m.

“Think about ice cream, think about confectionery. Some of you may have seen earlier, this week, our announcement on a vegan KitKat product​. And so further downstream, we can see continued success and new products​,” he said.

Nestlé said it is aiming to boost organic sales growth towards 4% this year, after strong demand for plant-based food and health products fuelled its growth.

“We’re seeing continued improvement in organic growth for the third year in a row now​,” Schneider told reporters.

“There’s a possibility to cross over the 4% point (this year), which would be great, but in light of the uncertainties it’s hard to commit to that right now​.”

In its report, Nestlé guided for a “continued moderate​” improvement in its underlying trading operating margin this year and the Vevey-headquartered company said it wants to achieve sustained mid-single-digit growth in the medium term after organic sales grew 3.6% in 2020, ahead of general consensus.

Unprecedented environment

“2020 was a year of hardship for so many, yet I am inspired by the way it has brought all of us closer together. I want to thank our employees and our partners - from farmers to retailers - who worked with us to ensure the supply of food and beverages to communities globally​,” Schneider said.

“In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability and return on invested capital.​

“The global pandemic did not slow us down. Our nutrition expertise, digital capabilities, decentralised structure and innovation engine allowed us to adapt quickly to changing consumer behaviours and trends. We advanced our portfolio transformation, continued to build Nestlé Health Science into a nutrition powerhouse and expanded our presence in direct-to-consumer businesses.​

“At the same time, we remained focused on sustainability and set out our path to achieve net zero greenhouse gas emissions by 2050. This journey is expected to support future growth and be earnings neutral - it will generate value for society and our shareholders​.

Schneider ended the call by looking to 2021, where he said Nestlé can expect continued improvement in organic growth, profitability and capital efficiency in line with its “value creation model​".