Nestle quarterly sales up as focus shifts to Asian diets | Business| Economy and finance news from a German perspective | DW | 20.04.2012
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Nestle quarterly sales up as focus shifts to Asian diets

Nestle has seen revenue rise by 5.6 percent in the first quarter of 2012. But sluggish growth in Western markets will force the world's biggest food group to look elsewhere for future profits.

Switzerland-based food company Nestle sold food and beverages worth 21.4 billion Swiss francs (17.8 billion euros, $23.4 billion) in the first quarter of 2012, the firm said Friday.

While growth in sales "stagnated" at 3 percent in industrialized countries, steep increases in sales were reported in the emerging markets of Asia, Latin America and eastern Europe.

"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," Nestle Chief Executive Paul Bulcke said at a news conference.

Discounting effects from a strong Swiss currency and recent acquisitions, so-called organic growth at Nestle amounted to 7.2 percent in the first quarter, with Europe contributing only 2.3 percent while Asia, Oceania and Africa added 11.4 percent.

Focus on Asian brands

The fastest growing brand in the food group was Nespresso, Nestle said, which thanks to "successful marketing" acheived 20 percent growth last year, and was "dominating" the market of coffee capsules.

Similarly successful were table water brands Pellegrino, Perrier and Vittel, contributing strongly to a sales boost of 8 percent in Nestle's table water segment.

In addition, Nestle's recent acquisitions in China, including sweets manufacturer Hsu Fu Chi and beverage maker Yinlu, had positively affected sales figures.

Acquisitions of well-established emerging market brands would continue to be an essential part of the company's growth strategy, Nestle said, adding that it expected half of all company revenues to be garnered in those markets by 2020, compared with 40 percent today.

However, in its outlook for 2012 the company said it expected a "challenging year" marked by a slowdown of business due to sagging Western demand.

Therefore, Nestle's 2012 organic growth rate would "drop" to 5 percent to 6 percent from 7.5 percent achieved in 2011.

uhe/sms (Reuters, dpa)