Developed market proves drag on Nestle

Nestle, the world’s biggest food group, warned that 2012 will be a tough year due to sluggish growth in the developed world.

Chief executive Paul Bulcke said: “As anticipated, 2012 is already confirming itself to be a challenging year.

“In many developed markets, where consumer confidence is low, the trading environment is subdued while in most emerging markets, conditions remain dynamic and rich in growth opportunities.”

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Nestle said emerging market demand and price rises helped first-quarter underlying sales growth to hold up better than expected.

The maker of Nescafe coffee, Kit Kat chocolate bars and Maggi soup reported a slight deceleration in quarterly organic sales growth, but it beat forecasts as price hikes contributed more to growth than analysts expected.

Paul Grimwood, chairman & chief executive of Nestle UK & Ireland, said: “Household budgets continue to be squeezed with the outlook for 2012 remaining challenging. However, we are pleased with the progress made in the UK and Ireland in the first quarter of this year with value growth in confectionery, beverages and food.”

The group, which employs just under 2,000 staff in York and between 500 and 800 in Halifax, dependent on the time of year, said innovation is driving growth.

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“There has been the expansion of the Maggi So Juicy and Herta ham ranges and in the last few weeks the launch of Rolo Blocks and Nescafe Azera,” said Mr Grimwood.

“Innovation also comes in the form of ‘Kit Kat Choose a Chunky Champion’ which helped the brand grow 6.5 per cent and news of Nestle removing all artificials from its entire confectionery range and the first confectioner to make its Easter egg range 100 per cent recyclable.”

Emerging markets, which already make up more than 40 per cent of Nestle sales, grew 13 per cent compared with just 3.1 per cent for developed countries, with volume growth down 0.4 per cent in the Americas and only rising 0.2 per cent in Europe.

Kepler analyst Jon Cox said: “A strong set of figures although we see the outlook statement as somewhat subdued and expect organic growth to decelerate through the remainder of the year.”

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