Nestlé success as group adapts to changing consumer habits

CHOCOLATE and coffee giant Nestlé said its UK and Irish businesses put in a robust performance in 2012, boosted by strong sales of Fairtrade KitKat bars.

The world’s biggest food group said it produced over a billion Fairtrade KitKats last year at its York site, which is one of the world’s largest confectionery factories.

The newly launched Fairtrade two-finger KitKat is now the UK’s second biggest Fairtrade product in terms of individual products sold, second only to bananas.

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The Swiss-headquartered group, which announced global financial results yesterday, said the UK & Ireland are growth markets for the company despite the tough economic environment.

The confectionery business, which also includes chocolate brands Milky Bar, Rolo and Yorkie, reported 2.5 per cent value growth.

This was achieved through a concerted effort to respond to changing UK consumer habits, with a new focus on the growing online, convenience and discount sectors.

“We’ve responded to changing shopping habits,” said Nestlé UK’s corporate communications manager James Maxton.

“Consumers are much more promiscuous. While they used to visit one supermarket, they are now visiting three different ones and using convenience stores a lot more for smaller shops.”

The group is also working closer with discounters such as Aldi, Lidl and pound shops.

“We have a range of products that fit in with them. They want something they can offer for £1. We’d rather offer them something than they go to the grey market. We’re providing a range of products that fit different platforms,” said Mr Maxton.

The group’s three confectionery sites are based in York, Halifax and Newcastle.

Nestlé said its Nescafé coffee brand continues to lead the coffee category following the introduction of new products such as Nescafé Azera, an instant barista style coffee which was launched last year.

Fresh coffee brand Nescafé Dolce Gusto, which promises coffee-shop quality at home for a fraction of the price, increased sales of coffee pods by nearly 40 per cent.

Nestlé also announced it will create 400 new jobs in the UK as the company continues its £500m investment programme.

These will include 300 new roles in Derbyshire and a doubling in the number of graduates joining the firm.

The group is recruiting at all its UK sites for a wide range of roles including apprenticeships, graduate positions and engineers.

Nestlé UK & Ireland chairman and chief executive Fiona Kendrick said: “2012 was a strong year for Nestlé UK & Ireland.

“Our consumers are adapting to the tough economic climate by changing the way they shop. We have grown our business by responding to this new reality, particularly in fast growing channels such as online shopping, convenience stores and discounters, as well as the more traditional outlets.”

Nestlé Waters finished 2012 with a record total value market share of 21.7 per cent, up from 20.5 per cent a year ago, making Nestlé Waters the fastest growing branded player in the category.

Nestlé Pure Life is the fastest growing bottled water brand with growth of 15.8 per cent in the year.

Buxton maintained its position as the UK’s best selling local mineral water with a value share of 12.8 per cent.

Nestlé said that Yorkie’s growth was fuelled by its return to TV for the first time in 10 years.

The Nestlé parent company said it expects 2013 to be as challenging as 2012 after reporting weaker-than-expected quarterly sales growth in Asia and the Americas.

Underlying 2012 sales growth came in at 5.9 per cent for the year, meeting average analyst expectations, and implying a slight recovery from third-quarter growth of some five per cent.

Yet sales growth in the Americas, which contributes almost a third of total sales, came in at 5.2 per cent, while Asia, Oceania and Africa (AOA), which accounted for about a fifth of sales, grew 8.4 per cent, the group said.

Both were less than analysts had expected.

“Sentiment is likely to take a knock after the disappointing Q4 performance in Zone AOA,” said analyst Ronny Landolt at Barclays Capital.

“This region has not bounced back after a series of one-offs affected Q3.”

Third-quarter sales took a surprise hit from one-off events such as typhoons in the Philippines, social unrest in Egypt and business disruptions due to sanctions on Iran.

Full-year results at Unilever beat expectations last month, thanks to strong haircare and soap sales.