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ECONOMY

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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ECONOMY

Why Switzerland continues to attract foreign companies despite the coronavirus pandemic

Despite the pandemic, 220 foreign businesses set up their offices in Switzerland in 2020.

Why Switzerland continues to attract foreign companies despite the coronavirus pandemic
Switzerland is a magnet for foreign companies. Photo by Valeriano de Domenico/AFP

While this number is 9 percent lower than in the previous year, these companies have created 11 percent more new jobs — a total of 1,168 — than in 2019. Most of the new jobs were created by companies from China, the United States and Germany.

About 3,600 more positions are expected to be offered by these enterprises in the next three years, according to data from SRF, Switzerland’s public broadcaster.

In fact, Switzerland is one of the very few countries that have been able to attract international companies to its shores in 2020, a notoriously bad year for the global economy.

READ MORE: Why Switzerland’s economy is on the up despite the coronavirus pandemic

Experts believe this is due to the country’s strengths, including political, economic and financial conditions.

“Even in a time of crisis, Switzerland scored thanks to its stability, predictability and security”, said Patrik Wermelinger, member of the executive board of Switzerland Global Enterprise (SGE), which promotes the country abroad on behalf of the federal government and the cantons.

There are also other reasons that had prompted foreign companies to come to Switzerland in 2020, despite the economic uncertainty and travel restrictions.

“Protection of legal rights, freedom, and personal responsibility are stronger in Switzerland than in many other countries, even in times of pandemic”, said SGE’s co-president Walter Schönholzer.

Switzerland’s attractiveness is also boosted by studies showing the country’s economy remains the strongest in the world.

Even though the health crisis plunged Switzerland’s economic activity into a “historic” 8.2-percent slump in the second quarter of  2020, the country still boasts the world’s most resilient economy, according to research by an insurance and reinsurance company Swiss Re. 

The International Monetary Fund (IMF) expects a 3.5-percent rebound in Switzerland’s gross domestic product (GDP) in 2021.

It said Switzerland’s economy absorbed the shock of the pandemic better than other European countries and it “has navigated the Covid-19 pandemic well”.

IMF added that Switzerland’s “early, strong, and sustained public health and economic policy response has helped contain the contraction of activity relative to other European countries”.

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