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NESTLE

Nestle posts strong first quarter growth

The world's biggest food company Nestle on Friday posted 2012 first quarter sales growth of 7.2 percent owing to strong demand in emerging markets.

Nestle posts strong first quarter growth
Nestle

Sales rose by 5.6 percent to 21.4 billion francs ($23.4 billion) between January and March, the owner of brands such as Kit Kat and Haagen Dazs said.

Chief executive Paul Bulcke said in a statement that 2012 was shaping up to be the “challenging year” the food giant had anticipated.

“In many developed markets where consumer confidence is low, the trading environment is subdued whilst in most emerging markets, conditions remain dynamic and rich in growth opportunities,” said Bulcke.

The company confirmed its full-year sales forecast of five to six percent growth.

In the first three months of the year business grew by 13 percent in emerging markets compared with 3.1 percent in developed markets.

There was weak demand for frozen food products in North America, but pet food sales were strong there.

Stocks and seasonings brand Maggi sold strongly in Africa as did Nescafe products in China, Nestle said, while KitKat performed well in Japan.  

“The good growth in the first quarter together with the pricing effect for the rest of the year and a likely improved raw material environment in the second half, allows us to confirm our full-year outlook of delivering 5-6 percent organic growth together with an improvement in the year-end margin and underlying earnings per share in constant currencies,” Nestle said.

The company last year posted a 9.5-billion-Swiss-franc profit, up 8.1 percent from 2010.

At its annual general meeting on Thursday shareholders elected chairman and chief executive of the AXA Group Henri de Castries to its board for a three-year term.

OPINION & ANALYSIS

Will Switzerland be able to feed itself in the future?

Amid a worsening climate crisis and an increasingly unstable world food system, Clare O’Dea looks at what Switzerland and its population need to do to ensure there is enough food on the table in the years to come.

Will Switzerland be able to feed itself in the future?

Faced with a growing global population, the climate crisis and increasingly degraded agricultural land, the challenge of how to feed the world in the near future is one of the burning issues of the day. 

Russia’s invasion of Ukraine has created a multitude of additional food security problems, contributing to already rising global food prices and rising input costs for agriculture, such as energy and fertilisers. 

Meanwhile, Switzerland’s food self-sufficiency rate is relatively low for Europe at around 50 per cent. The government’s new agriculture strategy for 2050 has set the seemingly modest goal of maintaining that level.

The 79-page strategy document, like most such publications, does not look beyond 2050. But this is just the point when climate change and increasing demand for food are expected to intensify.

Should we be alarmed?

One thing the Covid-19 pandemic showed was that not all countries are equally affected by a global crisis. Money is usually the main protection against disaster, but leadership, preparedness, and the ability and willingness to respond quickly are also important. 

For domestic food production over the next two to three decades, hope still rests on two main pillars – boosting productivity in a sustainable way, and changing consumer behaviour. There’s not much else that can be done. 

EXPLAINED: Why Switzerland’s inflation has rate stayed low compared to elsewhere?

The bad news is that the Swiss population is not eating a well-balanced diet and the average intake of calories is too high.

People are not eating enough dairy products, pulses, fruit and vegetables and consuming too much meat, sweet things and alcohol. 

We all know this.

But did you know how harmful this love affair with our stomachs is? The strategy document spells it out: “The environmental impact of consumption could be halved if people adopted a healthy diet, based on the nutritional recommendations.”

With a different portfolio of food grown in Switzerland corresponding to a healthier diet, the self-sufficiency rate would increase too. Consumer behaviour is changing but not radically or quickly enough. It’s hard to see the harm being reduced without enforced measures of some kind. 

READ MORE: Seven products that are becoming more expensive in Switzerland

Another crying shame of our food system and lifestyle is that a third of the food produced by farmers ends up being wasted between field and fork. All that energy, money and ecological impact for nothing. 

Although food self-sufficiency carries its own risks – vulnerability to local shocks, extra pressure on the environment – being too reliant on imports is not ideal. Overall, the EU is a net food exporter. But the Swiss government has made it clear that Switzerland will continue to rely significantly on imports for the foreseeable future. 

One simple reason is the limited availability of agricultural land. Currently 36 per cent of Switzerland’s land surface is given over to agricultural production and pasture. Farmers have to compete with growing urbanisation and, of course, the non-negotiable presence of the mountains that cover 60 per cent of the land’s surface.

During the Covid-19 pandemic we saw that money can, up to a point, buy you health. Switzerland nabbed so many of the globally available vaccines that it has had to donate or destroy surplus. Money can also buy you food, and this, along with proximity to supply, puts Switzerland is a rather secure position. 

In fact, Switzerland came fifth out of 113 countries in the Global Food Security Index which considers the issues of food affordability, availability and quality, as well as natural resource and resilience. By which we could conclude that everything is under control. 

The victims of this year’s global food crisis – the 323 million people who will become acutely food insecure, according to the UN – live in the countries that routinely appear at the bottom of such indexes. 

Nevertheless, according to the Swiss agricultural research body Agroscope, we should not feel a false sense of security. Apart from dependence on foreign countries and climate change, power supply is one of the key threats to Swiss food supply. 

In its latest annual assessment of threats to food supply, Agroscope wrote that the probability of and the potential damage from a serious power shortage are particularly high compared to other risks. “Supplies of vital foodstuffs would be massively affected, the effects would be manifold, and would not be overcome quickly.”

If the worst comes to the worst, Switzerland stockpiles compulsory stocks of essential goods for bridging in case of crisis and shortages. Mandatory storage facilities around the country hold three to four months’ worth of basic foodstuffs like sugar, rice, cooking oils, cereals and animal feed. 

Coffee, opiates and nuclear fuel: What are Switzerland’s ‘strategic stockpiles’?

Is that reassuring? Three months doesn’t feel like a lot.

These stocks are only released when the economy itself is no longer able to satisfy demand. In any case, Agroscope says “household emergency stocks are of great importance”.

I don’t know about you, but I’m off to the supermarket.

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