Nestle Nutrition achieves 10 per cent growth target

By Jess Halliday

- Last updated on GMT

Related tags: Nestlé

Nestle has reported strong overall organic growth in its first
quarter, said to be fuelled by the move towards nutrition, health
and wellness and a strong basis on which to reiterate its full year
targets.

The Swiss food giant reported overall sales of CHF 24.251bn (€14.77bn) for the three months ended March 31, representing 7.4 per cent organic growth. Although Nestle said this growth was partly due to higher demand in advance of expected price increases (particularly in dairy and pet care), it is also seeing the quarter as evidence that its health-drive is a strategy in the right direction. Significantly, the Nestle Nutrition business unit achieved its target 10 per cent organic growth on a like-for-like basis for the first time (sales were CHF 1.632bn (€0.99bn), up from CHF 1.349 bn (€0.8bn) for the same period of 2006). "These encouraging figures reflect the acceleration of our move towards nutrition, health and wellness across our main food and beverage brands, as well as the strong performance of our globally-managed Nestle Nutrition unit,"​ said chairman and CEO Peter Brabeck-Letmathe. Nestle Nutrition has also been bolstered by recent acquisitions of Jenny Craig, Novartis Medical Nutrition and, just last week, US baby food brand Gerber. The organic growth rate does not include any contribution from any of these businesses. Brabeck-Letmathe said the acquisition of Gerber from Novartis for US$5.5bn "has further accelerated the transformation process and will give Nestle undisputed global leadership in nutrition, health and wellness​". The acquisition is expected to be completed in the second half of 2007 and is subject to regulatory approval. Nestle's nutrition health and wellness drive has been gaining pace for the last few years. In late 2005 it announced an investment of €500m in developing its health and wellness image. The Nestlé Growth Fund was designed to allow Nestlé to invest in new businesses in the area of science and nutrition. Nutrition, health and wellness is now a factor in the company's general operations, which include waters, milk products and ice-cream, prepared dishes and cooking aids, chocolate, confectionery and business, pet care and pharmaceutical products. Its specific Nestle Nutrition unit is made up of baby development, performance, and healthcare interests. Nestle is by no means the only company in the food sector following this strategy. Other leading companies not traditionally associated with health such as Mars establishing business divisions dedicated to health. But as the world's largest food group, its emphasis is likely to be something of a trend-setter, and is a strong indication that interest in health is more than a passing fad, but a theme that look set to endure into the future. Nestlé said towards the end of last year that predicts organic growth of between 5 and 6 per cent during full year 2007, in spite of "continued significant input price pressure, mainly in agricultural raw materials." In full year 2006 the company reported​ sales of CHF98.5 billion (€60.5bn) while organic growth was 6.2 per cent and net profit was up 13.8 per cent to CHF9.2 billion (€5.6bn).

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