After a stronger-than-expected start to the year, Nestlé’s organic growth moderated in the second quarter to 1.3%, reflecting the severe impact of movement restrictions on out-of-home businesses and some consumer destocking. In the first half, Nestlé saw sustained momentum in the Americas and positive sales development in EMENA (Europe, Middle East, and North Africa). Zone AOA saw a sales decrease, with growth turning positive in the second quarter. Organic growth was 4.1% in developed markets, based entirely on RIG. Growth in emerging markets was 1.1%.
By product category, the largest growth contributor was Purina PetCare, led by its premium brands Purina Pro Plan and Purina ONE. Dairy saw high single-digit growth, based on strong demand for fortified milks such as Nido and Bear Brand, as well as Coffee mate. Prepared dishes and cooking aids grew at a mid-single-digit rate, with strong momentum in frozen foods. Vegetarian and plant-based food products grew by 40%, supported by further expansion of Garden Gourmet in Europe and increased growth for Sweet Earth in the United States.
“Nestlé has remained resilient in a rapidly changing environment, delivering solid organic growth and improved margins in the first half. These results demonstrate the agility of our business and the strength of our diversified portfolio across geographies, product categories, and channels. With consumer behavior evolving faster than ever, we are adapting to this new reality by strengthening our innovation, leveraging our digital capabilities, and executing with speed. Our engaged teams and their commitment to delivering business results while driving progress against our societal and environmental commitments make us a stronger company every day,” Mark Schneider, Nestlé CEO said.
In the first half, COVID-19 related costs were CHF290m, including expenses for bonuses paid to frontline workers, employee safety protocols, donations, and other staff and customer allowances. In addition, the Group absorbed costs of CHF120m related to staff and facilities made idle due to lockdown measures. The exact financial impact of COVID-19 for the full year remains difficult to quantify and will depend on the duration and economic consequences of this crisis as well as the speed of recovery in the out-of-home channel.