VEVEY, SWITZERLAND — Double-digit growth for Purina ONE, Purina Pro Plan and Felix brands made Purina PetCare the main contributor to Nestlé’s organic growth in the first nine months of fiscal 2023. The brand was “the largest growth contributor” in Zone North America and a key growth contributor in Zone Europe.
Note: Swiss franc (CHF) to USD conversions are based on Oct. 20 conversion rates.
Over the first nine months of the year, Purina PetCare posted CHF 14.01 billion ($15.69 billion USD) in sales, up roughly 6% from nine-month sales in fiscal 2022. The segment posted real internal growth of 2.6% and organic growth of 13.1%, representing the highest growth out of all other Nestlé product categories over the period. Pricing was up 10.4%, tied for the highest increase in pricing with the company’s Water business.
“Our diversified portfolio and differentiated offerings helped us deliver strong organic growth in the first nine months of the year,” said Mark Schneider, chief executive officer of Nestlé. “Growth was driven by pricing as we continued to navigate historic inflation levels. The recovery of our volume and mix is underway. We are seeing the benefits of our portfolio optimization initiatives and increasing marketing investments behind our billionaire brands. These steps underpin our confidence that real internal growth, the sum of volume and mix, will turn positive in the second half of the year and again become the main driver of growth going forward.”
Purina PetCare supported 8.0% organic growth in Zone North America, with broad-based demand across the portfolio and in various retail channels, including e-commerce. The segment’s Tidy Care litter brand introduced a new range of products that saw “strong initial demand” in the region, according to Nestlé.
Across the pond, Purina PetCare was a key contributor to 8.8% organic growth in Zone Europe, supported by premium brands including Felix, Gourmet and Purina ONE. In Zone Asia, Oceania and Africa (AOA), Nestlé’s pet segment saw mid-single digit growth in sales, led by its Purina ONE, Supercoat and Felix brands, and supported mid-single digit growth in Oceania overall.
In Zone Latin America, Purina PetCare posted mid-single-digit growth, and in Zone Greater China saw double-digit growth supported by recent product innovation and expansions to local production.
“PetCare posted continued strong double-digit growth despite capacity constraints,” said François-Xavier Roger, executive vice president and chief financial officer at Nestlé, in the company’s nine-month earnings call on Oct. 19. “Science-based premium and veterinary products saw strong sales developments. Growth was also supported by continued e-commerce momentum and innovation.”
Overall, Nestlé reported organic growth of 7.8%, supported by 8.4% growth in pricing, and flat real internal growth at -0.6%. Net sales decreased slightly to CHF 68.8 billion ($77.1 billion USD), down 0.4% from the previous nine-month period. The company reported foreign currency exchange had a 7.4% negative impact on sales, and net acquisitions carried a negative impact of 0.8%.
Cost inflation remains high overall, but is tapering off for select commodities, Nestlé reported.
Retail sales across product categories clocked a 7.1% increase, while e-commerce sales were up by 12.7% over the nine-month period, accounting for 16.6% of the company’s total sales. Nestlé reported out-of-home organic growth of 15.7%.
Nestlé has reaffirmed its full-year 2023 guidance, including organic sales growth between 7% and 8%, an underlying trading operating profit margin between 17% and 17.5%, and underlying earnings per share growth between 6% and 10%.
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