Nestlé sees slower growth in APAC despite positive results in China and India

According to Nestlé’s statement on its half-year report, overall organic growth (representing company growth after removing the impact of acquisitions, divestitures and other changes) for the company as a whole was 8 , 1%, with total reported revenue increasing 1.5% year-on-year. -an to CHF 41.8 billion (US $ 46 billion).

In the Asia, Oceania and Sub-Saharan Africa (ESA) region, Nestl̩ achieved 6.8% overall organic growth to reach 10.9 billion Swiss francs (US $ 12 billion) Рwhich is lower than observed growth in its other operating regions in Europe, Middle East and North Africa (EMENA) by 8.0% (to reach CHF 12.6 billion / US $ 13.9 billion) and the Americas ( AMS) at 8.9% (reaching CHF 18.3 billion / US $ 20.1 billion).

The AOA region was also the only one of the three regions where the underlying commercial operating profit (profits before taking into account other business expenses, for example restructuring or equipment) decreased by 40 basis points (0 , 4%) from 22.7% to 22.3% – EMENA saw an increase in profits from 50 basis points (0.5%) to 18.8% and AMS increased by 40 basis points (0 , 4%) to 19.3%.

“[Within AOA], China posted double-digit growth, helped by an upturn in out-of-home channels and the Chinese New Year calendar [and] South Asia also saw double-digit growth [led] by Maggi, KitKat and Nescafé [and] with strong momentum in e-commerce ”,Nestlé said via its report.

“[However], Southeast Asia experienced negative growth in a challenging economic environment – high single-digit growth in Malaysia and Vietnam was offset by lower sales in the Philippines [which dropped 8.3% from] 1.45 billion francs ($ 1.6 billion) to 1.34 billion francs ($ 1.48 billion).

Many countries in the Southeast Asian region are currently experiencing hardship brought on by the persistence or resurgence of COVID-19 cases locally and concerns over the Delta variant of the virus – for example, the Philippines recently Returning to a state of ‘moderate risk’ after an increase in the number of cases in July, Malaysia registers on average more than 15,000 new cases per day amid serious political unrest, and Indonesia, which registers on average more than 40,000 new cases a day, saw predictions that it will be the “Last country in the world to emerge from the COVID-19 pandemic”.

India is also averaging nearly 40,000 new cases per day, but the country’s large population appears to have maintained consumption – in terms of Nestlé sales figures, the South Asian nation recorded 838 million Swiss francs ( US $ 922 million) in sales in the first six months of 2021, which is an increase of 6.08% compared to CHF 790 million (US $ 870 million) last year.

Within the APAC region, Greater China, the Philippines and India are the countries where Nestlé has the best sales figures, followed by Japan, Australia and the rest of the region. Japan and Australia also posted positive sales growth figures.

Focus RDT

One of the priority areas for the company to regain or strengthen its growth could be the area of ​​ready-to-drink, which has been hailed by Nestlé CEO Mark Schneider as a “Fast growing segment”.

“With our expansion plans in RTD coffee, Nestlé will continue to build on its global leadership in coffee and benefit from new growth opportunities in a segment that is growing rapidly and attracting new and younger consumers. “David Rennie, director of Nestlé coffee brands, said in a separate statement about RTD coffee’s expansion plans with partner Starbucks.

Specific to the APAC region, an example of a focus on RTD can be found at Nestlé Indonesia, which is currently building a factory dedicated to RTD products such as MILO and Nescafé.

“Nestlé Indonesia is optimistic about growth opportunities in Indonesia [for] the RTD category, “Nestlé Indonesia Corporate Affairs Director Debora R Tjandrakusuma said FoodNavigator-Asia.

“Indonesia has a large consumer base [and the government has created a] conducive business environment with promising opportunities – locally we have as the trend among consumers here is towards convenient products such as these RTD drinks.

“[This is why] We have invested approximately $ 220 million in the new plant and expanding the capacity of our other three plants in the country.

Nestlé Malaysia has in turn combined its focus on plants with RTD products in the form of the launch of its recent dairy-free MILO drinks and Nescafé lattes, all available in ready-to-drink formats.

Focus on the water

Another important part of the report highlighted Nestlé’s plans to regenerate local water cycles in all of its regions of operation, including Asia to create a positive impact on water from 2025.

“Nestlé will invest CHF 120 million ($ 130 million) to help implement 100 projects at the 48 Nestlé Waters sites. [to] help regenerate local water cycles [and] manage water resources in a sustainable manner ”,says Nestlé.

“From 2025, these measures will help nature near each Nestlé Waters site to retain more water than [we currently use in our] operations. “

Specifically in Asia, the focus is on places like Pakistan, which is the first location where the Nestl̩ Pure Life water brand was established Рwork is underway to improve access to local water. and the use of water in the community.

“[Locally], there are various realities that need to be addressed with projects such as access to water for communities, construction of filtration stations, and the emphasis is also on supporting local farmers to use drip irrigation in agriculture ”,Nestlé Waters’ sustainability manager, Cedric Egger, told us earlier.

“[This] is in order to avoid too much water withdrawal (water that is taken from a source such as a lake or a river) and make the land around it too dry, especially when rainfall is not equal or sufficient.

Overall, Nestlé intends to certify all Nestlé Waters sites worldwide under the Alliance for Water Stewardship (AWS) by 2025.

Leave a Reply

Your email address will not be published.