Nestlé 9-month sales report shows lower than expected growth, but the company predicts recovery

By Augustus Bambridge-Sutton

- Last updated on GMT

Nestlé’s growth was not as high as expected. Image Source: redmal/Getty Images
Nestlé’s growth was not as high as expected. Image Source: redmal/Getty Images

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Nestlé yesterday released its 9-month sales report, which showed lower-than-expected growth, likely due to price rises. Organic growth in Europe was significantly higher than growth overall.

Nestlé’s 9-month sales report showed an organic growth rate of 7.8%, which was slightly lower than the 8.1% that analysts had predicted. This sent shares down by 2% in the morning’s trade.

Its real internal growth (RIG), which is a measure of sales volume, fell by 0.6%, however, which aligned with expectations. This year, Nestlé’s RIG has been trending upwards, and the company’s CFO, François-Xavier Roger, stated that he expects RIG to be positive in 2023’s fourth quarter.

The step-up in RIG is being driven by the moderation of new pricing, the benefits of portfolio optimisation and increased marketing investments​,” said Roger. He suggested that one of the reasons for the negative impact on RIG was due to portfolio optimisation actions, most significantly winding down Frozen Food Canada faster than initially planned.

Pricing was at 8.4%, which Mark Schneider, Nestlé’s CEO, suggested was due to “significant input cost inflation over the last two years”.​ However, this is starting to moderate, and the pricing increase was slightly lower than the 8.6% analysts had predicted.

Divestures, the selling off of a firm’s portfolio companies, contributed to Nestlé’s lower decrease in sales, most notably due to the disposal of a majority stake in US-based ready-meals company Freshly, as well as baby food manufacturer Gerber Good Start.

Foreign exchange also significantly negatively impacted sales (by 7.4%) due to broad-based appreciation in the Swiss Franc.

Nestlé expects its overall organic growth to be between 7% and 8% by the end of the year. The company aims to push forward its price moderation, bringing down the high costs that have been an impediment to growth in previous years.


Nestlé’s European business had a significantly higher rate of organic growth than the business overall, at 8.8%. However, Europe’s RIG fell by significantly more, 2.3%. This was, Nestlé suggested, due to ‘capacity constraints and portfolio optimisation actions,’ reducing the amount of sales and therefore creating a negative RIG. Sales were reduced by 2.4% by divestures.

Pricing was also higher than the global trend, at 11.1%. Nestlé suggested that growth in Europe was supported by pricing, suggesting this was the reason behind the disparity between organic growth and RIG.

Growth was boosted by out-of-home and e-commerce. The lead contributors to growth by country were Turkey and the UK, alongside Eastern and Central Europe.

The threat of weight-loss drugs

Novo Nordisk’s new weight-loss drug Wegovy has prompted fears among some food manufacturers. The drug supresses appetite, which suggests that it could impact food sales. However, thus far, Nestlé has seen no impact in its sales from Novo Nordisk’s drug.

We have not seen any impact on sales so far,” ​said a Nestlé spokesperson. “The largest parts of our portfolio is not centre of plate, and will not be affected by the weight loss drugs. However, we are as part of our constant innovation already working on a wide number of products that could serve as very helpful companions during the course of the treatment involving these drugs. The aim is to have supplements that can help with the loss of lean muscle mass and rapid regain of weight during and after the treatment respectively​.”

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