STRONG demand for pet food, convenience foods and big-name brands during the coronavirus pandemic helped boost sales for Nestlé.

The York-headquartered company has reported organic sales growth of 3.5 per cent in the first nine months of 2020, and up 4.9 per cent in the third quarter.

Consumer appetite for products such as Maggi noodles and DiGiorno frozen pizza helped sales for the nine months reach SFr61.9bn ($68.4bn), in line with analysts’ expectations.

Growth was driven by a 3.3 per cent rise in volumes. Increased prices contributed just 0.2 per cent for the world’s largest foodmaker.

Performance was boosted by “strong momentum” in the Americas, the Purina Petcare brands and demand for dietary supplements made by the company’s growing health science division.

At-home products continue to do well, but out-of-home products continue to struggle, although there was some improvement in the third quarter.

Nestlé now expects full year organic sales growth of around 3 per cent. Underlying operating margins and earnings per share are expected to improve.

The shares rose 1.3 per cent following the announcement.

Mark Schneider, who took over as chief executive in 2017, said:"Nestlé has remained resilient in a difficult and volatile environment. Our people have acted in a responsible and prompt manner to mitigate the impact of the global pandemic and have adapted quickly to evolving consumer needs.

"Strong organic growth was broad based and supported by sustained momentum in the Americas, Purina PetCare and Nestlé Health Science, as well as the acceleration of our coffee business in the third quarter.

"We continue to develop our portfolio with speed and discipline.

"As an example, we are transforming Nestlé Health Science into a nutrition and health powerhouse through a combination of strong organic growth and targeted acquisitions.

"The recent additions of Zenpep, Vital Proteins and Aimmune Therapeutics are further steps in the expansion of our nutritional health offerings."

So what products fared well?

  • The largest contributor to growth was Purina PetCare and its science-based and premium brands Purina Pro Plan, Purina ONE and Felix.
  • Dairy grew at a high single-digit rate, based on increased demand for fortified milks and home-baking products.
  • Coffee posted mid single-digit growth, fueled by strong consumer demand for Starbucks products, Nespresso and Nescafé.
  • Prepared dishes and cooking aids reached mid single-digit growth.
  • Vegetarian and plant-based food products delivered strong double-digit growth, supported by new product launches and continued distribution expansion.
  • Nestlé Health Science posted double-digit growth, reflecting increased consumer demand for products that support health and the immune system.
  • Confectionery and water reported a sales decrease due to their high exposure to out-of-home channels, with some improvement in the third quarter.

Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown, said: “Confectionary sales are rather sour at the moment, as Nestle’s sweets and chocolates are more exposed to out-of-home spending, which has melted away thanks to the pandemic.

"On the plus side, products more exposed to new home-centric ways of life are doing well. There’s been a noticeable increase in vegetarian, health and coffee products, while Purina PetCare also did well, as people around the world continue to take care of themselves, and their pets.

Crucially, the KitKat maker continues to take a volume-led approach to sales, and coronavirus hasn’t upended that. This modus operandi tends to be a more difficult approach than relying on ever increasing prices, but it’s more sustainable in the long run.

Trading in China turned positive in the third quarter, which is an important milestone and a good indicator for what we could expect from other consumer giants. While it’s too early to say how robust the recovery is, we think things are moving in the right direction.”