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Swiss food giant Nestle’s sales hit by coronavirus lockdown

Nestle said Thursday that second quarter growth slowed as lockdowns aimed at halting the spread of COVID-19 shuttered eateries, while confined consumers relied on home reserves.

Swiss food giant Nestle's sales hit by coronavirus lockdown
Swiss food giant Nestle. Photo: FABRICE COFFRINI / AFP

The company's organic sales, which had swelled 4.3 percent during the first quarter as people emptied supermarkets in anticipation of confinement measures to come, grew just 1.3 percent in the second three-month period of the year.

Nestle, which owns KitKat, Nespresso, and Maggi among other brands, explained in a statement that the slowdown reflected “the severe impact of movement restrictions on out-of-home businesses,” as well “consumer destocking after pantry building in March.”

For the first six months of the year, organic sales grew 2.8 percent, the company said.

READ: Which countries have quarantines for Swiss arrivals?

At the same time, its total reported sales dropped 9.5 percent during the first half of the year to 41.2 billion Swiss francs ($45.1 billion, 38.3 billion euros).

The company stressed that divestitures like the recent sale of its US ice cream business, and foreign exchange impacts reduced its overall sales figure by 12.3 percent.

At the same time, Nestle reported that restructuring had helped its net profit shoot up 18.3 percent to 5.9 billion francs for the first six months of the year.

Nestle chief executive Mark Schneider meanwhile hailed the company's performance in the midst of the coronavirus crisis, insisting it had “remained resilient in a rapidly changing environment.”

The impact of the crisis meanwhile varied greatly in different markets, depending on when restrictions were implemented and how severe they were, Nestle said.

North America for instance remained resilient, while China, where COVID-19 first emerged late last year, posted a double-digit sales decline, but saw growth improve to almost flat by the end of the second quarter as movement restrictions eased.

Different product categories were also impacted in different ways, with demand for at-home consumption and personal health products soaring, while water and confectionery, which are often purchased in restaurants and shops, and often on a whim, saw sales slip.

Nestle meanwhile said it had incurred 290 million francs in additional costs linked to the crisis, including expenses for bonuses paid to frontline workers and employee safety protocols.

In addition, it said it had been hit with 120 million in costs linked to staff and facilities made idle due to lockdown measures.

Looking forward, the company stressed that “the exact financial impact of COVID-19 for the full year remains difficult to quantify,” adding the final number will “depend on the duration and economic consequences of this crisis as well as the speed of recovery in the out-of-home channel.”

Following Thursday's announcement, Nestle saw its share price inch up 0.5 percent to 111.20 francs in midday trading as the Swiss stock exchange's main SMI index slipped 0.9 percent.

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COVID-19

Switzerland’s Montreux Jazz Festival cancels concerts of unvaccinated British artists

Switzerland’s Montreux Jazz Festival announced on Friday that it was forced to drop the acts of four UK-based artists from its summer program because they haven’t been fully vaccinated yet.

Switzerland's Montreux Jazz Festival cancels concerts of unvaccinated British artists
British singer-songwriter Rag'n'Bone Man was dropped from Montreux Jazx Festival. Photo: GUILLAUME SOUVANT / AFP

The move was done in order to comply with current Covid-19 entry rules into Switzerland, which state that from June 26th, travellers from outside the Schengen zone, including Brits, will only be allowed to enter Switzerland if they have been fully vaccinated or have recovered from the virus. 

READ ALSO: Switzerland relaxes travel rules for vaccinated Americans and Brits: What you need to know

British soul singer Rag’n’Bone Man who was one of the headliners for the 2021 edition of the festival, which starts on July 2nd, will now no longer be able to attend due to not being fully vaccinated.

Other unvaccinated acts based in the UK who were also dropped because of the new entry rules include Inhaler, Alfa Mist and the Yussef Dayes Trio.

The artists have already been replaced with other performers from around Europe including Italian singer Zucchero, Woodkid, Dutch songwriter Benny Sings and Danish jazz trio Athletic Progression.

In a statement on June 25th, festival organisers said they were trying to make sure that the concerts of the other UK artists would continue to go ahead, however it is tricky because of fears over the Delta strain of the Covid virus, which has now become dominant in Britain.

“Whether or not these artists can come depends on their vaccination status and that of their touring entourage, as well as their ability to quarantine at the start of their European tour or before their concert at Montreux,” they said.

The Montreux Jazz Festival is one of just a small handful of big music festivals in Switzerland that will still go ahead this summer. Other music events such as St Gallen Open-Air, Paléo and Bern’s Gurten festival have been cancelled for the second year in a row, due to ongoing fears over the Covid-19 virus.

READ ALSO: UPDATE: What rules do European countries have for travellers from the UK?

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