Nestle's bottled drinks sell well in China, but the growth of instant coffee slows down.
Nestl é, the world's largest food manufacturer, released its semi-annual report for 2015, which showed that its global sales in the first half of the year were 42.8 billion Swiss francs (280.34 billion yuan), an organic growth of 4.5% and a real internal growth of 1.7%. The operating profit is 15%.
Paul Bulcke, CEO of Nestl é, said the first-half results were in line with expectations and continued to show strong performance even in difficult circumstances, which was closely related to Nestl é's strategy on nutrition and health. At the same time, the company's investment in Nestle's growing health science and dermatology has shown good momentum and has become a complement to Nestle's food and beverage business, which has confirmed the company's full-year expectations. He believes the company plans to achieve organic growth of 5 per cent in 2015 by improving profit margins and potential earnings per share, as well as capital efficiency.
By product segment, the nutrition and health science products mentioned by Paul Paul Bulcke achieved sales of 7.3 billion Swiss francs (47.815 billion yuan) in the first half of 2015, an organic growth of 7.3 percent, second only to Nestl é 's second largest category of confectionery, with sales of 3.9 billion Swiss francs (25.545 billion yuan), an organic growth of 8.5 percent.
The results show that in the region of Asia, Oceania and Africa (Zone AOA), where China is located, Nestl é's sales in the first half of 2015 were 7.1 billion Swiss francs (46.505 billion yuan), an organic growth of 0.8 per cent and a real internal growth of-0.8 per cent, lower than the performance of the region in the same period last year. Nestl é's sales in the region reached 8.9 billion Swiss francs (58.295 billion yuan) in the first half of last year, an organic growth of 4.7% and a real internal growth of 1.9%.
Considering that Nestl é recalled Meiji instant noodles in India in the first half of this year, and Nestl é's sales, organic growth and actual internal growth figures in the AOA region in the first quarter of this year were 3.6 billion Swiss francs (about 23.58 billion yuan),-0.2% and-2.3% respectively, Nestl é's situation in the region showed signs of improvement.
In the Chinese market, Nestl é has adjusted its product portfolio to meet changing consumer demand, but the company's categories, including room temperature milk, confectionery and instant coffee, are growing modestly because of the low growth environment, the report said. But ready-to-drink drinks, including ready-to-drink coffee, have seen double-digit growth.
Instant coffee business has become an urgent problem to be solved in Nestle China. Freshly ground coffee chains, represented by Starbucks, are eroding the market share of instant coffee. Earlier, Nestl é's coffee factory in Dongguan destroyed 4 million tons of instant coffee to match the launch of new packaging and boost the Chinese market.
In April, Wan Ling Martello, the new head of Asia, Oceania and Africa, said at an analyst conference, "while the growth of instant coffee is indeed slowing, we are still the biggest players in this market. The new formula of Nestle Coffee, including the expansion of some product ranges, should stimulate the growth of this category. "
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