Nestlé reports nine-month sales for 2022

Nestlé reports nine-month sales for 2022

 Organic growth reached 8.5%. Pricing was 7.5%, reflecting significant cost inflation. Real internal growth (RIG) was resilient at 1.0%. Organic growth was broad-based across most geographies and categories.
 Total reported sales increased by 9.2% to CHF 69.1 billion (9M-2021: CHF 63.3 billion). Net acquisitions had a positive impact of 1.2%. Foreign exchange decreased sales by 0.6%.
 Portfolio management on track. In the third quarter, Nestlé Health Science completed the acquisitions of Puravida in Brazil and The Better Health Company in New Zealand.
 Full-year 2022 outlook updated: we now expect organic sales growth around 8%. The underlying trading operating profit margin is expected around 17.0%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Mark Schneider, Nestlé CEO, commented: “We delivered strong organic growth as we continued to adjust prices responsibly to reflect inflation. The challenging economic environment is a concern for many people and is impacting their purchasing power. That’s why we aim to keep products affordable and accessible while considering the interests of all our stakeholders. Our real internal growth remained resilient despite a high base of comparison and continued supply chain constraints, with limited demand elasticity. At the same time, we continue to invest in R&D, marketing and sustainability initiatives, as demonstrated by the recent launch of our Nescafé Plan 2030. We remain confident in the strength of our brands, operational execution and underlying category dynamics which position us well for future growth.”

 Total Group Zone North America  Zone Europe Zone AOA    Zone Latin America  Zone Greater China  Nespresso   Nestlé Health Science   Other Businesses

Sales 9M-2022 (CHF m) 69 132 19 093 13 968 13 899 8 648 3 843 4 674 4 811 196
Sales 9M-2021 (CHF m)* 63 294 17 173 13 736 13 343 7 416 3 585 4 654 3 237 150
Real internal growth (RIG)** 1.0% 0.1% 1.5% 1.1% 2.5% 2.1% – 1.9% 1.9% 28.0%
Pricing** 7.5% 11.1% 5.7% 7.0% 10.5% 2.6% 4.9% 2.6% 3.0%
Organic growth** 8.5% 11.2% 7.1% 8.1% 12.9% 4.7% 3.0% 4.5% 31.0%
Net M&A** 1.2% – 4.8% 2.0% – 0.1% 0.1% 0.0% – 0.1% 42.5% 0.0%
Foreign exchange** – 0.6% 4.8% – 7.5% – 3.9% 3.6% 2.4% – 2.5% 1.6% 0.2%
Reported sales growth 9.2% 11.2% 1.7% 4.2% 16.6% 7.2% 0.4% 48.6% 31.2%

• 2021 figures restated following the creation of Zone North America (NA) and Zone Greater China (GC) as of January 1, 2022. Zone AOA includes Middle East and North Africa (MENA) previously included in Zone EMENA
  ** RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines

Group sales
Organic growth was 8.5%, reaching 9.3% in the third quarter. Pricing was 7.5%, reflecting significant cost inflation. RIG was resilient at 1.0% following a high base of comparison in 2021 and continued supply chain constraints, with limited demand elasticity.
Organic growth was 7.4% in developed markets, mostly driven by pricing with slightly positive RIG. Organic growth in emerging markets was 10.2%, supported by both pricing and RIG.
By product category, Purina PetCare was the largest contributor to organic growth, with continued momentum for science-based and premium brands Purina Pro Plan, Purina ONE and Fancy Feast as well as veterinary products. Sales in coffee grew at a high single-digit rate, with positive sales developments for Nescafé, Starbucks and Nespresso. Growth in Infant Nutrition reached a double-digit rate, with broad-based contributions across geographies. Confectionery reported double-digit growth, reflecting particular strength for KitKat and seasonal products. Water posted double-digit growth, despite supply chain constraints, led by premium brands, S. Pellegrino, Acqua Panna and Perrier . Dairy reported mid single-digit growth, with continued momentum for coffee creamers and a recovery for home-baking products. Cocoa and malt beverages saw high single-digit growth, with particular strength for Milo as well as Nesquik ready-to-drink formats. Prepared dishes and cooking aids posted low single-digit growth, following a high base of comparison in 2021, with continued strong demand for Maggi. Sales in vegetarian and plant-based food continued to grow at a double-digit rate, led by Garden Gourmet. Nestlé Health Science recorded mid single-digit growth, driven by Medical Nutrition and healthy-aging products.
By channel, organic growth in retail sales remained robust at 7.3%. Within retail, e-commerce sales grew by 8.4%, building on growth of 17.2% in the first nine months of 2021. Organic growth in out-of-home channels reached 26.1%, with sales exceeding 2019 levels.
Net acquisitions increased sales by 1.2%, largely related to the acquisitions of the core brands of The Bountiful Company and Orgain. The impact on sales from foreign exchange was negative at 0.6%. Total reported sales increased by 9.2% to CHF 69.1 billion.

Portfolio Management
On April 1, 2022, Nestlé Health Science completed the acquisition of a majority stake in Orgain, a leader in plant-based nutrition. Orgain complements Nestlé Health Science’s existing portfolio of nutrition products that support healthier lives. The deal is expected to be slightly accretive to Nestlé’s organic growth, while slightly dilutive to the Group’s underlying trading operating profit margin in 2022. The agreement includes the option for Nestlé Health Science to fully acquire Orgain in 2024.
On September 1, 2022, Nestlé Health Science completed the acquisition of Puravida, a premium Brazilian nutrition and health lifestyle brand. The acquisition will enable Nestlé Health Science to expand its consumer health portfolio in Latin America.
On September 1, 2022, Nestlé Health Science completed the acquisition of The Better Health Company. The acquisition includes the GO Healthy brand, New Zealand’s leading supplement brand, and New Zealand Health Manufacturing, an Auckland-based manufacturing facility for vitamins, minerals and supplements. The acquisition will expand Nestlé Health Science’s portfolio of vitamins, minerals and supplements in AOA.
Zone Asia, Oceania and Africa (AOA)
 8.1% organic growth: 1.1% RIG; 7.0% pricing.
Sales 9M-2022 Sales 9M-2021 RIG Pricing Organic growth Net M&A Foreign exchange Reported growth
Zone AOA CHF 13.9 bn CHF 13.3 bn 1.1% 7.0% 8.1% – 0.1% – 3.9% 4.2%

Organic growth reached 8.1%, with pricing of 7.0% and RIG of 1.1%. Foreign exchange reduced sales by 3.9%. Reported sales in Zone AOA increased by 4.2% to CHF 13.9 billion.
Organic growth in Zone AOA reached a high single-digit rate, driven by pricing, portfolio optimization and a further recovery of out-of-home channels. The Zone saw market share gains in culinary, ready-to-drink and portioned coffee, as well as Infant Nutrition.
South-East Asia posted mid single-digit growth, led by Nescafé, Maggi and KitKat, particularly in Malaysia. South Asia recorded double-digit growth, with market share gains and continued momentum for Maggi, KitKat and Nescafé. In the third quarter, Nestlé India launched a premium infant cereal range under the Gerber brand. Sales growth in Middle East and Africa was close to a double-digit rate, based on strong momentum for affordable offerings across Maggi, Milo and Infant Nutrition. Japan reported mid single-digit growth, led by ready-to-drink Nescafé and Purina PetCare. Sales in South Korea grew at a double-digit rate, driven by Starbucks products and increased demand for KitKat . Oceania reported high single-digit growth, with particular strength for Nescafé and Maggi. Confectionery also saw strong growth, supported by the launch of a new KitKat range with Milo filling.
By product category, culinary was the largest growth contributor led by double-digit growth for Maggi, particularly for cooking aids and noodles. Coffee posted high single-digit growth, with continued strong demand for Nescafé and Starbucks products. The Zone launched Starbucks ready-to-drink products in selected markets. Sales in Nestlé Professional grew at a strong double-digit rate across geographies and categories. Infant Nutrition reached high single-digit growth, with a further recovery in the third quarter. Cocoa and malt beverages posted high single-digit growth. Sales in confectionery grew at a double-digit rate, led by KitKat. Purina PetCare recorded high single-digit growth, with continued momentum for Purina ONE, Felix and Purina Pro Plan.
Nespresso
 3.0% organic growth: – 1.9% RIG; 4.9% pricing.
Sales 9M-2022 Sales 9M-2021 RIG Pricing Organic growth Net M&A Foreign exchange Reported growth
Nespresso* CHF 4.7 bn CHF 4.7 bn – 1.9% 4.9% 3.0% – 0.1% – 2.5% 0.4%

• RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines
  Organic growth was 3.0%, with pricing of 4.9%. RIG was – 1.9% following double-digit growth in 2021 during the pandemic. Foreign exchange negatively impacted sales by 2.5%. Reported sales in Nespresso increased by 0.4% to CHF 4.7 billion.
  Nespresso reported low single-digit organic growth, following double-digit growth in 2021, with consumption remaining above pre-pandemic levels. The Vertuo system saw further momentum, with broad-based contributions across geographies. During the third quarter, Nespresso launched Vertuo Pop, a new compact machine made with recycled materials, in a number of European markets. Growth was also supported by a further recovery in out-of-home channels, with continued expansion of the Momento system and improved sales development for the office segment.
  By geography, North America posted double-digit growth with continued market share gains. Europe reported a sales decrease. Other regions combined recorded high single-digit growth.

Nestlé Health Science
 4.5% organic growth: 1.9% RIG; 2.6% pricing.
Sales 9M-2022 Sales 9M-2021 RIG Pricing Organic growth Net M&A Foreign exchange Reported growth
Nestlé Health Science* CHF 4.8 bn CHF 3.2 bn 1.9% 2.6% 4.5% 42.5% 1.6% 48.6%

• RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines
  Organic growth was 4.5%, following double-digit growth in both 2020 and 2021 during the pandemic. Pricing was 2.6% and RIG 1.9%. Net acquisitions increased sales by 42.5%, largely related to the acquisition of the core brands of The Bountiful Company and Orgain. Foreign exchange positively impacted sales by 1.6%. Reported sales in Nestlé Health Science increased by 48.6% to CHF 4.8 billion.
  Nestlé Health Science posted market share gains. Growth was supported by pricing, innovation and geographic expansion.
  Consumer Care reported low single-digit growth. Healthy-aging products grew at a double-digit rate, supported by Boost and Nutren. Growth in vitamins, minerals and supplements was close to flat, following a high base of comparison particularly for immunity-related products during the pandemic. Vital Proteins saw double-digit growth, helped by new product launches and further geographic expansion. Pure Encapsulations, a super-premium offering recommended by healthcare professionals, posted double-digit growth. Sales of Orgain, the recently acquired plant-based nutrition business, grew at a strong double-digit rate. Growth was based on distribution expansion and innovation, particularly for the kids’ protein organic nutrition range.
  Medical Nutrition reported double-digit growth, with strong sales developments for pediatric and allergy products, Althéra, Alfaré and Alfamino. Zenpep posted high single-digit growth with market share gains. Palforzia, the peanut allergy treatment, saw further patient adoption.
  By geography, sales in North America grew at a mid single-digit rate. Europe saw positive growth. Other regions combined posted double-digit growth.

Business as a force for good: Reducing greenhouse gas emissions in coffee farming and improving coffee farmers’ livelihoods
Nestlé is on a path to gradually reduce absolute greenhouse gas emissions in its supply chain and to achieve net zero emissions by 2050. For that reason, the company is supporting the transition to a regenerative food system. With the Nescafé Plan 2030, the company is now executing on these ambitions through its largest coffee brand.
The Nescafé Plan 2030 is an integrated strategy that is meant to simultaneously reduce greenhouse gas emissions in coffee farming while boosting the incomes of coffee farmers through the implementation of regenerative agriculture. It builds on Nescafé’s decade-long sustainability work. The brand will invest over one billion Swiss francs into the Plan by 2030 – an investment that is supported by Nestlé’s regenerative agriculture financing.
Nescafé will work with coffee farmers to make the transition to regenerative agriculture by providing them with training, financial support and high-yielding coffee plantlets. Some of the regenerative practices that will be encouraged include:
 planting cover crops
 optimizing fertilization, including the use of organic fertilizers
 increasing the use of agroforestry and intercropping and
 pruning or replacing existing trees with disease and climate-change resistant varieties.
Nescafé will test, learn and assess the effectiveness of multiple regenerative agriculture practices, prioritizing the seven countries from which it sources 90% of its coffee: Brazil, Vietnam, Mexico, Colombia, Côte d’Ivoire, Indonesia and Honduras. Its goal, in line with the Nestlé Group’s ambition for all key agricultural ingredients, is to source 20% of its coffee from regenerative agricultural methods by 2025 and 50% by 2030.
Regenerative farming will improve soil health and fertility. Healthier soil holds more water and captures more carbon from the atmosphere. This will help Nescafé reduce its greenhouse gas emissions by 50% by 2030, in line with the Nestlé Group commitment.
Nescafé will simultaneously help boost the income of farmers who make the transition to regenerative agriculture. It will pilot a financial support program in selected countries to test the best approach according to local conditions. Some of the measures that may be used include: conditional cash incentives for the adoption of regenerative agriculture practices, income protection through weather insurance and greater access to credit lines for farmers.
Nescafé will track the progress and assess the results of its field programs through its Monitoring and Evaluation partnership with the Rainforest Alliance. It is also partnering with Sustainable Food Lab, among others, for topics related to coffee farmers’ income assessment, strategy and progress tracking.
With this extensive Plan, Nescafé aims to help make coffee farming globally more sustainable.

Outlook
Full-year 2022 outlook updated: we now expect organic sales growth around 8%. The underlying trading operating profit margin is expected around 17.0%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Annex

Nine-month sales overview by operating segment

 Total Group Zone North America  Zone Europe Zone AOA    Zone Latin America  Zone Greater China  Nespresso   Nestlé Health Science   Other Businesses

Sales 9M-2022 (CHF m) 69 132 19 093 13 968 13 899 8 648 3 843 4 674 4 811 196
Sales 9M-2021 (CHF m)* 63 294 17 173 13 736 13 343 7 416 3 585 4 654 3 237 150
Real internal growth (RIG)** 1.0% 0.1% 1.5% 1.1% 2.5% 2.1% – 1.9% 1.9% 28.0%
Pricing** 7.5% 11.1% 5.7% 7.0% 10.5% 2.6% 4.9% 2.6% 3.0%
Organic growth** 8.5% 11.2% 7.1% 8.1% 12.9% 4.7% 3.0% 4.5% 31.0%
Net M&A** 1.2% – 4.8% 2.0% – 0.1% 0.1% 0.0% – 0.1% 42.5% 0.0%
Foreign exchange** – 0.6% 4.8% – 7.5% – 3.9% 3.6% 2.4% – 2.5% 1.6% 0.2%
Reported sales growth 9.2% 11.2% 1.7% 4.2% 16.6% 7.2% 0.4% 48.6% 31.2%

• 2021 figures restated following the creation of Zone North America (NA) and Zone Greater China (GC) as of January 1, 2022. Zone AOA includes Middle East and North Africa (MENA) previously included in Zone EMENA
  ** RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines

Nine-month sales overview by product

 Total Group Powdered & liquid beverages Water   Milk products & ice cream   Nutrition & Health Science  Prepared dishes & cooking aids  Confec-tionery  PetCare

Sales 9M-2022 (CHF m) 69 132 18 461 2 776 8 267 11 625 9 152 5 640 13 211
Sales 9M-2021 (CHF m) 63 294 17 499 3 230 7 837 9 363 8 873 5 132 11 360
Real internal growth (RIG)** 1.0% 0.7% 6.0% – 3.6% 3.7% – 6.3% 6.4% 4.8%
Pricing** 7.5% 7.3% 9.1% 8.5% 4.8% 8.9% 4.4% 9.6%
Organic growth** 8.5% 8.0% 15.1% 4.8% 8.5% 2.6% 10.7% 14.4%

** RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines

For more information, please contact:
Layal Dalal, Media Relations Manager, Middle East and North Africa
Tel.: 00971559803757
Email: [email protected]

About Nestlé Middle East and North Africa (MENA)
Nestlé’s heritage in the Middle East and North Africa goes back over 100 years with the sale of the first Infant Cereals in Egypt. Today, Nestlé operates 25 Food & Beverage factories across the 19 countries of the MENA region and provides direct employment to more than 15,000 people who are all committed to Nestlé’s purpose of unlocking the power of food to enhance quality of life for everyone, today and for generations to come. Nestlé MENA also provides indirect employment across the region to several thousand more.

The Nestlé portfolio in the region currently exceeds 60 innovative product brands in a wide range of categories: Dairy, Infant Nutrition, Coffee and Creamers, Confectionery, Bottled Water, Breakfast Cereals, Culinary products, Health Science, and Pet Care, among others. Nestlé NIDO, Nestlé CERELAC, Nestlé NAN, S-26, PROGRESS, NESCAFÉ, NESPRESSO, Bonjorno Café, Coffee-mate, KitKat, MAGGI, Nestlé FITNESS, Nestlé Grain d’Or, Nestlé Pure Life, OPTIFAST, and PURINA Friskies are just some of the brands available in the Middle East and North Africa.
To know more, you can visit:
Website: www.nestle-mena.com
Facebook: https://www.facebook.com/NestleMiddleeastNorthafrica
Twitter: https://twitter.com/nestleme
YouTube: https://www.youtube.com/c/NestléMENA