Nestlé, the world’s largest food company, has reported its fastest sales growth in five years as stuck-at-home consumers adopted more cats and dogs, boosting demand for pet food.
Revenue growth may cross the threshold of 4% and should at least match 2020’s 3.6% pace, on an adjusted basis, CEO Mark Schneider said on Thursday. Analysts have forecast 3.9% growth.
Schneider is trying to deliver on his target for growth of about 4% after the pandemic forced him to delay the goal, originally set for 2020. Nestlé shares fell as much as 0.7% in Zurich.
“Exceeding that bar in 2021 is not a slam dunk,” Schneider said. “This is something we’re going to have to work hard for.”
2020’s revenue was just ahead of analysts’ expectations. Pet food surged 10%, the fastest in more than a decade. Meanwhile, Nestlé has been struggling to get sales of chocolate and beverages to accelerate, and revenue has declined in China, the company’s second-largest market, on weaker demand for infant formula and because of the timing of new year celebrations.
“Medium-term confidence is growing,” said Patrik Schwendimann, an analyst at Zürcher Kantonalbank. “Nestlé is on course to achieve at least 4% annual growth again as of 2022.”
Earlier in February, Unilever reported fourth-quarter sales that beat analysts’ estimates after it rode out the pandemic year with consumers buying staples such as shampoo and food seasonings during lockdowns. Other consumer-goods companies, such as PepsiCo and Kraft Heinz also benefited from shoppers keeping pantries full.
Nestlé’s bottled-water revenue plunged 7%, suffering from lockdowns and social-distancing measures around the world. That underlines why Nestlé agreed to sell its US bottled-water business to private equity firm One Rock Capital Partners for $4.3bn earlier this week. Nestlé plans to focus on faster-growing premium water brands such as Perrier and San Pellegrino.
Nestlé will put more emphasis on acquisitions, though it would be wrong to declare an end to potential divestments, Schneider also said.
“We have a portfolio that needs to be adjusted to opportunities and consumer needs,” Schneider said. “We have a pipeline, and we’re interested in balancing the buying and selling in a much better way.”
Nespresso sales rose 7%, reaching 5.9-billion Swiss francs ($6.6bn), Nestlé said, adding it’s going to start publishing separate figures for the brand again.