Nestle S A : premium baby formula saw strong demand in China despite falling birth rates -CFO
September 25, 2019 at 06:33 am
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(Reuters) - Nestle's infant nutrition business in China grew at a healthy pace, despite a steep fall in birth rates and an overall slowdown in consumption, the company's chief financial officer said at a conference on Wednesday.
CFO Francois-Xavier Roger said China's birth rate had dropped 16% last year, but the company still managed to grow its infant formula business in the country by about 4% to 5% in the first half of the year, due to strong demand for its premium offerings, Illuma and S-26 gold.
Chinese mothers have shown a growing preference for pricier imported infant formula products following a domestic tainted-milk scandal in 2008, when several infants died after the industrial chemical melamine was added to milk powder to raise protein levels.
However, Roger said while demand for premium products in the country was strong in the first half, there was a slowdown in consumption of mainstream offerings, which led to sales growth of about 2.5% to 3% overall, or about half the pace it had achieved in the same period a year earlier.
At the Bernstein conference in London, Roger also said the company continued to focus on restructuring its portfolio through acquisitions and divestments to meet its 2020 growth targets, which calls for sales growth in the mid-single-digit percentage range.
Nestlé S.A. is the world's leading agri-food group. Net sales break down by category of products as follows:
- powdered and liquid beverages (26.7%): soluble coffees (Nescafé and Starbucks brands), coffee in capsules (Nespresso), chocolate drinks (Nesquik, Milo, etc.), tea drinks (Nestea), etc.;
- pet food (20.3%): brands such as Purina, Friskies, Felix, etc.;
- pharmaceutical, nutrition and well-being products (16.4%): nutritional supplements (Resource, Boost, Nutren, Optifast, Peptamen brands, etc.), infant and maternal nutrition products (NAN, illuma, Cerelac, Nido, Gerber), ketogenic beverages (BrainXpert), (Nesquick, Fitness, Cheerios, Lion, etc.), etc.;
- ready meals and seasoning products (12.5%): frozen and chilled dishes (Lean Cuisine, Hot Pockets and Stouffer's brands), soups (Maggi), etc.;
- dairy products and ice cream (11.8%): powdered milk, sweetened condensed milk, yoghurt and cream desserts, ice cream (Nido, Nesvita, Carnation, La Laitière, Coffee Mate, Nestlé Ice Cream, Dreyers, Häagen-Dazs, Extrême brands, etc.);
- chocolates, sweets and biscuits (8.7%): Kit Kat, Smarties, Cailler, Terrafertil, etc. brands;
- bottled waters (3.6%): Nestlé Pure Life, Vittel, Perrier, S. Pellegrino, etc. brands.
Net sales are distributed geographically as follows: Switzerland (1.2%), France (3.8%), the United Kingdom (3.8%), Germany (2.4%), Europe (12.8%), the United States and Canada (35%), China (5.9%), Asia and Oceania (21.4%) and Latin America (13.7%).
NESTLÉ S.A. 
