VEVEY, SWITZERLAND — The Purina ONE, Purina Pro Plan and Friskies brands continue to lead at Nestlé in terms of organic sales gains, with all three brands seeing double-digit growth in the first half of fiscal 2023.
Note: Swiss franc (CHF) to USD conversions are based on July 28 conversion rates.
Overall, Purina PetCare remains the second-most profitable division at Nestlé behind its Powdered & Liquid Beverages business. Six-month sales for Purina topped 9.37 billion CHF ($10.8 billion USD), up 9.1% from 8.59 billion CHF ($9.9 billion USD) in the first six months of 2022. Real internal growth (RIG) was clocked at 2.9%, and organic growth was 15%, which reflected Nestlé’s strongest real internal and organic growth rates across all segments.
According to Nestlé, capacity constraints continue to impact real internal growth for all divisions, more acutely for its Purina and Water segments.
Sales growth for Purina PetCare in the first six months of fiscal 2023 can be partially attributed to higher pricing. Nestlé increased its pricing for the business by 12.1% over this period, the highest of all other divisions.
Purina saw market share gains in Zone North America, Zone Europe, Zone Latin America and Zone Greater China. The PetCare division led sales growth in Zone North America across channels, but particularly online. This included double-digit sales growth for Purina ONE, Purina Pro Plan and Friskies brands.
In Zone Europe, Purina’s premium brands were a main contributor to growth, including Felix, Gourmet and Purina ONE. All channels saw growth in this region, with Nestlé noting e-commerce growth as particularly strong.
The PetCare business saw mid-single-digit growth in Zone Latin America, “following a high base of comparison in 2022,” according to the company.
Purina Pro Plan and Fancy Feast drove double-digit growth for the PetCare segment in Zone Greater China. Nestlé noted continued growth will be supported by new production lines opened at its facility in Tianjin, China, in the second quarter.
In Zone Asia, Oceania and Africa (AOA), Purina witnessed high-single-digit growth led by its Supercoat, Purina ONE and Felix brands. The PetCare division supported mid-single-digit growth in Japan for Nestlé, as well as high-single-digit growth in South Korea.
In its presentation at the 2023 Consumer Analyst Group of New York (CAGNY) Conference, Nestlé shared plans to invest roughly 3 billion CHF ($3.5 billion USD) from 2022 to 2025 in its pet nutrition operations. Projects include two dry facilities in Eden, NC, and Williamsburg Township, Ohio; two wet facilities in Wroclaw, Poland, and Rayong, Thailand; and two dry/wet combination facilities in Vargeão, Brazil, and Tianjin, China.
Overall, Nestlé reported 46.29 billion CHF ($53.34 billion USD) in sales for the first six months of 2023, up roughly 1.6% from 45.58 billion CHF ($52.52 billion USD) year-ago. Real internal growth was down slightly, organic growth was reported at 8.7%, and pricing across the company increased by 9.5%.
According to the company, e-commerce sales for the whole business were up 13.5% in the first six months of the year, now accounting for 16.7% of the company’s total sales. Organic growth for retail sales remained steady at 8%, and came to 17.1% for out-of-home channels.
“…We look towards the second half and the year 2024 with confidence,” said Mark Schneider, chief executive officer, director and member of the executive board at Nestlé, in the company’s half-year earnings call on July 27. “Very importantly, after several years of day-to-day crisis management, we have seen signs of further normalization in our operating environment in the first half. This allows us to be more strategic and more forward-looking in the way we manage our business.”
The company increased its full-year guidance for organic sales growth, now expected between 7% and 8%. Underlying trading operating profit margin is projected between 17% and 17.5%, and the company anticipates its underlying earnings per share will grow between 6% and 10%.
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