Coffee helps Swiss food giant Nestle brew up sales growth

Nestle said on Thursday April 18th that its sales have climbed, boosted by recent acquisitions including the right to market Starbucks coffee products in supermarkets around the world.

Coffee helps Swiss food giant Nestle brew up sales growth
Nestle CEO Ulf Mark Schneider addresses the annual general shareholders meeting on April 11th, 2019 in Lausanne. Photo: Fabrice Coffrini/AFP.

Despite the overall climate of stagnant consumer spending in industrialized countries and a slowdown in growth in emerging markets, Nestle reported a 4.3 percent rise in sales in the first quarter of this year to 22.2 million Swiss francs ($22 billion, €19.4 billion). Recent acquisitions accounted for 1.2 percentage points of that increase.

In recent years, the company has been under intense shareholder pressure to boost sales and profitability, and has been shaking up its portfolio that includes over 2,000 brands, including household names such as Gerber's baby food, Perrier sparkling water and Haagen-Dazs ice cream in addition to its eponymous chocolate.

Nestle, which owns the Nespresso capsule and Nescafe instant coffee brands, has made coffee a key priority in its growth strategy, including the $7 billion acquisition last August of the rights to market Starbucks coffee outside of the chain's cafes.

READ ALSO: Switzerland's Nestlé agrees to sell insurance unit for $1.55 billion

The group has in particular sought to expand its coffee presence in the United States, where it has bought a majority stake in California-based high-end brand Blue Bottle Coffee and acquired Texan brand Chameleon Cold Brew.

Chief Executive Mark Schneider highlighted the launch of a new range of 24 premium coffee products under the Starbucks during the quarter.

“The Nestle and Starbucks teams did an outstanding job and developed these products in just six months,” he said, adding that the company's increased speed and innovation “are clearly paying off”.

The company confirmed its forecast for higher sales on a like-for-like basis and bigger operating profit margins this year.

The Swiss group was not completely impervious to the sluggishness in consumer spending, being able to increase its sales prices by only 1.2 percent in the quarter.

READ MORE: Nestlé pays $7.15 billion to license Starbucks products

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Swiss central bank announces big rate hike in inflation fight

The Swiss National Bank (SNB) raises the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

Swiss central bank announces big rate hike in inflation fight

“The rate change applies from tomorrow, September 23rd 2022”, SNB said in a press release on Thursday.

It added that “inflation [in Switzerland] rose to 3.5 percent in August and is likely to remain at an elevated level for the time being”.

The latest rise in inflation is principally due to higher prices for goods, especially energy and food, according to the bank.

The SNB’s forecast for the evolution of inflation is, however, positive.

It forecasts that the rate will drop to 2.4 percent in 2023 and and 1.7 percent for 2024.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher”, the bank said.

In mid-June, the SNB tightened interest rates by half a percentage point for the first time in 15  years. Since then, inflation in Switzerland has continued to rise. For August 2022, the statisticians reported inflation of 3.5 percent, after 3.4 percent in June and July.