Nestlé Posts Strong Performance During Pandemic

Stephen DeAngelis

April 27, 2020

Anyone following the stock market knows the roller coaster ride it has taken since the onset of the Covid-19 pandemic. One company doing well during the outbreak is Nestlé, the world’s largest food company. Nestlé’s stock traded higher after it reported organic sales growth of 4.3% for the first quarter of 2020. Clark Schultz (@ClarkSchultz) notes, “The company’s performance was strong in developed markets amid the pantry-loading behavior of consumers during the shutdowns.”[1] Lockdowns in many countries have reminded consumers of the importance of shelf stable products, which sparked the “pantry-loading behavior” noted by Schultz. Because of the company’s strong performance, Schultz reports, “In something of a surprise, Nestlé maintains its full-year guidance at the moment. Most consumer-facing multinationals have pulled their full-year outlooks.”

In the Nestlé quarterly report, the company noted, “Prepared dishes and cooking aids grew at a high single-digit rate, with improved growth across all brands. Coffee saw good momentum, fueled by the demand for Starbucks products, Nespresso and Nescafé. Nestlé Health Science posted double-digit growth, reflecting elevated demand for consumer and medical nutrition products.” Also doing well, the report states, are pet foods. “By product category, the largest growth contributor was Purina PetCare and its premium brands Purina Pro Plan and Purina ONE.” Pets, it turns out, have become a source of comfort for people isolated by the pandemic. Emma Grey Ellis (@EmmaGreyEllis) reports, “All over the country, from New York to Wisconsin and North Carolina to Colorado and New Mexico, animal shelters are reporting massive upswings in the numbers of animals they’ve been able to adopt out or place in foster homes. The reason why is no mystery: As people are practicing social distancing to curb the spread of Covid-19, many have come to the conclusion that now is the perfect time to bring a pet into their homes.”[2]

Christopher Doering (@cdoering) reports, “Nestlé has kept U.S. shelves stocked amid a surge in demand for its products like Hot Pockets and Nespresso coffee so far during the novel coronavirus outbreak, the head of Swiss giant’s American operations told Food Dive, but it’s too soon to know if the recent spike in sales will continue.”[3] Steve Presley, head of Nestlé’s U.S. operations, told Doering, “We need to continue to produce in this crisis. That’s the first step of normalcy for a lot of people. [Showing] up to the grocery store and [finding] food on the shelf. So we have a big part in returning a calmness to the market.” Doering reports, “Nestlé ​has added ​overtime hours and shifts in many of its 68 U.S. factories to make sure they are running full time to meet the demand.” Reuters reports, “Nestlé [is] partnering with [the] Red Cross to provide the humanitarian agency with supplies and transportation, and was donating 10 million Swiss francs, food, water and medical nutrition products to those most affected by the pandemic.”[4] Nestlé Chief Executive Officer Mark Schneider stated, “The COVID-19 pandemic is a global problem and consequently we are offering help on the ground everywhere.”

Nestlé is not only watching out for consumers the company is also watching out for its employees. Reuters notes, “[Nestlé] said it would pay full salaries for at least three months to employees affected by work stoppages to prevent the spread of coronavirus. The move will cover both part-time and salaried employees as well as those working in its retail operations — the Kit Kat Chocolatory and Nespresso boutiques — which have been temporarily closed in some places. … The Nescafe coffee maker, which has 291,000 employees across the world, also said it would provide cash advances or loans to those in financial difficulties, and that it had put in place generous sick leave arrangements for employees who may have contracted the virus.”

From working closely with Nestlé over the past several years, I can attest to the company’s outstanding leadership and global vision. I also salute Nestlé’s hardworking employees who risk contracting Covid-19 in order to ensure the world has the food and other supplies it needs during these unusual circumstances.

Footnotes
[1] Clark Schultz, “Nestle +3% after strong Q1, maintained guidance,” Seeking Alpha, 24 April 2020.
[2] Emma Grey Ellis, “Thanks to Sheltering in Place, Animal Shelters Are Empty,” Wired, 10 April 2020.
[3] Christopher Doering, “Nestlé running full time to help return ‘a calmness to the market’ amid coronavirus,” Food Dive, 30 March 2020.
[4] Staff, “Nestle staff to get full salary for three months where COVID-19 halts work,” Reuters, 26 March 2020.