Nestlé has reported its first quarter sales results for 2022 with Purina PetCare being the largest contributor to overall organic growth.
The pet care business was a leader for growth across North America, Europe, and Latin America, posting double-digit figures in all three regions over the January to March period.
Sales for the Purina PetCare business were up 13.5 per cent from the previous year, reaching 4.12 billion Swiss francs (AUD$5.96 billion). This growth was led by Purina’s science-based and premium brands Purina ONE, Purina Pro Plan and Fancy Feast as well as veterinary products.
François-Xavier Roger, Chief Financial Officer, Nestlé S.A, said during a conference call, that sales in most segments and geographies grew at a double-digit rate with market share gains.
“Purina’s performance was reasoned by sustained strong demand for premium products Purina Pro Plan, and Purina ONE, as well as veterinary products. The recently launched ProPlan LiveClear continues to resonate strongly with consumers and organic growth reached 65 per cent. The product is now distributed in 25 markets,” he said.
In Nestlé’s Asia, Oceania, and sub-Saharan Africa (AOA) zone, of which Australia is a part of, Purina recorded high single digit growth and market share gains in the pet care category.
Roger highlighted that Purina PetCare is “still at a relatively early stage of development” in Asia, compared to Europe and the US, but is gaining market share.
Nestlé’s overall organic growth was 7.6 per cent, with real internal growth (RIG) of 2.4 per cent. Pricing increased to 5.2 per cent to reflect significant cost inflation. Organic growth now excludes the Russia region, given significantly disrupted trading conditions and Nestlé’s decision to focus on providing essential food.
By product category, Purina PetCare was the largest contributor to organic growth followed by coffee, which saw high single-digit growth fuelled by continued demand for Nescafé, Starbucks and Nespresso.
Sales in confectionery grew at a double-digit rate, with strong growth for KitKat and gifting products.
Water posted double-digit growth, driven by a further recovery of out-of-home channels and premium brands S.Pellegrino and Perrier. Dairy reported mid-single-digit growth, with strong sales developments in coffee creamers and ice cream as well as premium and fortified milks.
Growth in Infant Nutrition reached a mid-single-digit rate, supported by improved sales developments in the Americas and Europe. Nestlé Health Science recorded mid-single-digit growth, reflecting high demand for Medical Nutrition and healthy-aging products.
Prepared dishes and cooking aids posted low single-digit growth following a high base of comparison in 2021, with continued strong demand for Maggi and Garden Gourmet.
By channel, organic growth in retail sales was 5.9 per cent. Within retail, e-commerce sales grew by five per cent, building on very strong growth of 39.6 per cent in the first quarter of 2021. Organic growth in out-of-home channels reached 35.6 per cent, with sales exceeding 2019 levels.
Mark Schneider, Nestlé CEO, commented: “In these first months of the year, the war in Ukraine has caused unspeakable human suffering. We remain focused on supporting our colleagues there and providing humanitarian relief, while standing with the international community in the call for peace.
“Amid this challenging environment, we delivered strong organic sales growth with resilient RIG. We stepped up pricing in a responsible manner and saw sustained consumer demand. Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year. The Nestlé team addressed these headwinds and advanced our long-term strategy and sustainability objectives with agility and determination. We confirm our guidance for the year.”