Nestlé 2018 results released! Coffee business performs well in China, but performance growth depends on price increases

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Nestl é has just released its annual report card.

According to the financial report, Nestle's organic growth in 2018 was 3%, of which the real internal growth was 2.5%, and the price factor was 0.5%. "the growth is mainly driven by the strong development momentum of the US and Chinese markets, as well as the baby nutrition business." The company pointed out in its financial report.

According to the announcement, Nestl é 's total sales rose 2.1 percent to 91.4 billion Swiss francs (618.57 billion yuan) in 2018, while earnings per share rose 45.5 percent to 3.36 Swiss francs (22.74 yuan). Through dividends and share buybacks, Nestl é returned 13.9 billion Swiss francs (94.071 billion yuan) to shareholders in 2018.

In 2017, the world's largest food company attracted public attention when it was found that its revenue exceeded that of Chinese Internet companies Alibaba, Tencent and Baidu combined. Today, Nestl é's latest annual report shows that its revenue grew to 618.5 billion yuan in 2018, which will once again exceed the sum of BAT.

Nestl é CEO Mark Schneider (Mark Schneider)

Mark Schneider, chief executive of Nestl é, said he was satisfied with the progress made in 2018. "all financial performance indicators have improved significantly, and we have achieved recovery growth in our two largest markets, the United States and China, as well as in the infant nutrition business." He said.

Snack Dai noted that the Nestle Asian Greater Africa region (AOA) maintained a median organic growth in 2018. Compared with 2017, the growth of the Chinese market has improved (note: organic growth in Greater China increased from 1.6% in 2017 to 5% in 2018). "this is due to innovation in baby nutrition, coffee and condiments, as well as the strong growth of e-commerce." Nestl é pointed out in its financial report.

Specifically, Nestl é Greater China's revenue was 7.004 billion Swiss francs (47.4 billion yuan) in 2018 and 6.578 billion Swiss francs in 2017, an increase of about 6.48 percent, according to the results reviewed by the snack generation.

In addition, the organic growth of Nestl é's Yinlu business in China has improved for three years in a row, with an increase in 2018 compared with 2017, according to the performance presentation by snack Daijun.

The food and beverage giant's business became more focused in 2018. Mr Schneider noted that Nestl é had made "significant progress in portfolio transformation" last year, focusing more on the group's strategic priorities and strengthening key growth categories and regions in the process.

"as we have completed a large number of transactions and announced a strategic review of Nestl é's skin health business and Herta business, the core of our strategy has become clearer." He said.

Snack Dai noted that Nestl é mentioned in its results released today that it would explore strategic options for the Herta cooked food (cold dishes and meat products) business in order to focus its product portfolio on high-growth categories.

This means that Herta's cooked food business could be spun off by Nestl é. According to Nestl é's global website, Herta currently offers cooking ingredients, meat products, pies and pizza dough, cake and biscuit mixtures and snacks. This brand product has not been introduced into China.

In particular, Nestl é upgraded its "innovation engine" in 2018 to ensure its technological leadership and shorten time to market, Schneider said in the financial report. "in the fast-changing food and beverage sector, Nestl é has the ability to truly attract consumers through meaningful innovation and essential products." He said.

Nestl é announced today that it nominated retail giant Ahold Delhaize N.V. Dick Boer, the company's former president and CEO, and Dinesh Paliwal, president and CEO of Harman International Industries, a subsidiary of Samsung Electronics Co., Ltd., are members of the board. The election will be held at the annual general meeting on April 11, 2019.

Launch of new Starbucks coffee products

Snack Dai noticed that the day before Valentine's Day, the food giant based in Weiwei, Switzerland, announced that it would launch a new line of Starbucks coffee around the world. There are 24 items in this series, including whole bean coffee, roasted ground coffee, and the first Starbucks coffee capsule developed for Nestle Nespresso and Nestl é multi-interest cool coffee machine system.

This is the first new product launch since the two companies formally established a global coffee alliance in August last year. Nestl é China said in a notice released today that Nestl é will begin to launch the series of products in multiple markets in Asia, Europe, Latin America, the Middle East and the United States.

Snack Dai learned from Nestl é China today that the Chinese market is also about to launch this series of new coffee products. "the products will be gradually promoted in China from the second quarter, and will be available in retail stores, online platforms and other channels." A person in charge of Nestl é China told the snack generation today that in addition, the new series of products will also be listed in some Starbucks stores, and Starbucks will be responsible for this channel.

As for the price of the new product, the two sides have not announced it yet. It is reported that the new coffee series includes a variety of iconic Starbucks blended coffee and individual coffee, as well as some classic drinks, such as caramel macchiato and cappuccino, all using Arabica coffee beans.

It is worth noting that the new product is aimed at household coffee consumption scenarios. "We are very pleased to be able to enable customers to enjoy Starbucks coffee at home through the Nestle single coffee machine platform." John Culver, president of Starbucks International and Channel Development Group, said that this marks that Starbucks has expanded new channels and further expanded the global influence of the Starbucks brand.

Bauer, executive vice president of Nestle Group, said the two teams had "done an excellent job in just six months." In fact, a few days after holding hands with the official announcement last August, the Nestl é team went to Starbucks'US headquarters in Seattle to discuss the development of a new series of products, according to Nestl é's official Wechat today.

"We made it clear from the beginning that we wanted to launch these products in March. The secret of how fast we can be is to form a small but focused team. As the project progresses, we will expand the team only when it is really necessary. " Said David David Rennie, head of Nestle Coffee's strategic business unit.

Lennie says one of the most challenging tasks is to replicate the unique taste of Starbucks coffee in Dookus and Nespezo capsules. "it involved a lot of fine-tuning work, and it took us about four weeks to finalize the formulations for all 24 products." He said.

"this is only the first of a number of product lines in the future. We will continue to bring the Starbucks experience to the homes of millions of consumers around the world. " Lennie said that Nestl é will continue to expand its coffee product portfolio in the future, and "more coffee products are being brewed".

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