No Pandemic Sugar Rush for Nestlé

The Covid-19 crisis has produced some surprising winners among the ranks of global food companies, including Kraft Heinz .

Nestlé ’s performance has been less spectacular by comparison but may prove more sustainable.

On Thursday, the world’s biggest food business said sales at constant exchange rates increased by 3.6% last year compared with 2019. That is shy of the 4% to 6% range that Chief Executive Mark Schneider was aiming for this year. Last week, Kraft Heinz said its sales over the same period increased by an impressive 6.5%. Shoppers have gone back to legacy brands that had fallen out of fashion with health-conscious consumers in recent years.

The pandemic has been more of a mixed bag at Nestlé. Roughly one-sixth of its revenue come from products like candy bars that tend to be consumed outside the home. Demand in this part of the business plummeted 30%. Trends were more positive in its pet-care division, where sales increased by more than 10%. Coffee brands also proved resilient.

Fears that the economic slump would cause consumers to trade down to cheaper alternatives haven’t materialized so far. The share of Nestlé’s sales generated by premium products like Nespresso coffee and Purina pet food increased to 30% of the group total in 2020, up from 26% a year earlier. Strong demand for these more expensive goods is offsetting weaker sales of mainstream brands.

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