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Nestle China reaps sweet gains on demand surge

By WANG ZHUOQIONG | China Daily | Updated: 2024-02-27 09:51
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Visitors check out Nestle products during the sixth China International Import Expo in Shanghai in November.  CHINA DAILY

Nestle China posted 2023 sales of 43.6 billion yuan ($6.06 billion), up 4.2 percent year-on-year, driven by increased product demand and e-commerce business, alongside a surge in market shares among soluble coffee, pet foods and confectioneries, according to its 2023 financial report.

Mark Schneider, Nestle CEO, said this year the company is prioritizing volume and diversified growth with increased brand support and consumer-centric innovations spanning premiumization, affordability and nutritious options.

"We will continue to focus capital allocation on our fast-growing billionaire brands, which enables us to deliver dependable growth while enhancing brand loyalty. To drive market share gains, our key priorities are delighting consumers through differentiated offerings and focusing on superior execution," said Schneider.

In the Chinese market, Nestle Professional — which offers food service operations with ingredients, products, systems and services — was the largest growth contributor, supported by innovation and distribution expansion, said the report.

The company's culinary category has posted high single-digit growth, with increased demand for food seasoning brand Totole in out-of-home retail channels and new product launches.

The confectionery category recorded mid-single-digit growth, led by Shark wafers and Hsu Fu Chi. Infant nutrition products also saw positive growth, led by NAN hypoallergenic and specialty baby formula offerings.

In the fourth quarter, Nestle China launched a new infant milk solution for its Illuma brand, which contains special prebiotics considered helpful to bolster a baby's immune system.

The company reported double-digit growth in sales of healthy aging products, attributable to the launch of N3 milk, a formulation low in lactose and rich in nutrients.

Coffee products reported low single-digit growth, supported by ready-to-drink offerings.

Last year, Nescafe capitalized on the burgeoning trend with the debut of Nescafe Ice Roast, catering to consumers seeking a refreshing dark coffee experience.

Purina PetCare grew at a double-digit rate, backed by new product launches and strong e-commerce performance.

Zhu Danpeng, a food and drink analyst in China, said he is optimistic regarding Nestle's prospects in the Chinese market, highlighting the company's consistent innovation and product updates, and the leverage of its expansive scale as key drivers of its potential growth.

Zhang Xiqiang, CEO of Nestle China, in a recent letter to employees, said the company is expanding into new distribution channels and markets to actively bolster its market share.

"Innovating is our primary catalyst for growth," said Zhang. "We must capitalize on opportunities in consumption and distribution channels, with a strategic focus on premiumization, scale and health, to maintain a competitive edge in the market."

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