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NESTLE

Higher Nestlé sales fall short of expectations

Higher first quarter sales for Swiss-based Nestlé, the world's leading food industry group, were lower than expected as growth slowed in emerging markets.

Higher Nestlé sales fall short of expectations
Photo: AFP/File

In the first three months of the year, Nestlé's sales rose by 5.4 percent to 21.9 billion francs ($23.6 billion) from the same period a year earlier, the company said on Thursday in a statement.
   
Nestlé said the figures showed that the group was in line to perform as 
expected in 2013, but analysts polled by financial news agency AWP felt they were a disappointment, given expectations of 22.5 billion francs in sales.
   
"The start to the year reflects the caution we expressed in February," 
Nestlé chief executive Paul Bulcke was quoted as saying.

The maker of Nespresso capsules, among many other things, said it had recorded organic growth of 4.3 percent during the first quarter, missing its long-term objective of between five and six percent.
   
The price of shares in the group fell by 1.1 percent to 63.60 francs 
in morning trading on a Swiss stock exchange that was down by 0.2 percent overall.
   
Nestlé noted "contrasting trading conditions across different regions," 
with robust 8.4-percent growth in emerging markets, but just 0.9 percent growth in developed markets.
   
All was not rosy in emerging markets however, Nestle acknowledged, as 
"events in the Middle East were disruptive," with the destruction of a plant in Syria that had served several markets in the region.
   
"There was some softening in certain markets, especially in comparison to 
the first quarter of 2012," it added.
   
The group's head of investor relations, Roddy Child-Villiers, told a 
telephone conference that sales of Nespresso were no longer growing as quickly owing to stiffer competition in the coffee capsule market, especially in Switzerland.
   
But Nestlé was also able to highlight good performances in China, as well 
as in Turkey, parts of Africa and Indonesia.
   
In the United States, the group's main market, sales grew by 5.3 percent to 
6.6 billion francs, while in Europe they were just 1.5 percent stronger at 3.7 billion francs, owing in part to a slowdown in France at the beginning of the year.

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NESTLE

‘Unlimited resources’: Switzerland’s Nestle goes vegan

Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.

'Unlimited resources': Switzerland's Nestle goes vegan
Photo: SEBASTIEN BOZON / AFP

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.

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