Under the general health trend, all traditional food companies represented by Nestlé, Pepsi, Coca-Cola, etc. have a common topic: how to make their products healthier and more in line with popular tastes?
On February 12, Nestlé released its full-year financial report for 2019. The annual report shows that Nestlé will achieve organic growth in 2019 (Organic Growth, which is one of Nestlé’s most important indicators for measuring performance, refers to the natural growth of revenue and profits of the company relying on existing resources and business) An increase of 2.9%; sales for the year were 92.6 billion Swiss francs (about 662 billion yuan), an increase of 1.2% compared to the same period last year.
From the perspective of internal growth, this is the best performance of 154-year-old Nestle in the past six years. From the perspective of net sales, this is also the largest increase in sales since 2015. According to Nestle, this is mainly due to the growth of the US market and the strong performance of Purina Pet Foods worldwide.
But Nestle’s performance in Greater China is poor. In 2019, Nestlé Greater China sales were 6.913 billion Swiss francs, which was a decline from 2018’s 7.04 billion Swiss francs. However, due to exchange rate differences between the two years, in terms of the exchange rate announced by Nestlé, Nestle Greater China’s revenue in 2019 was approximately 48.121 billion yuan, an increase of 1.48% compared with 2018’s 47.4 billion yuan.
In general, regardless of the impact of the exchange rate, Nestlé’s growth in China is not very satisfactory. In the financial report, Nestlé attributed the “small organic growth” in Greater China to “the peak sales season in China in the fourth quarter as it approaches the Chinese New Year.”
Headache Silver Heron
In the 2019 Fortune Global 500 list released by Fortune Magazine, Nestle still ranks first among food companies, followed by food giants such as Pepsi and ADM. However, the overall ranking of food companies is falling-the leader of Nestle, Nestle, has fallen from 69th to 76th in 2018, and Coca-Cola has fallen by 67 positions.
As mentioned earlier, traditional food giants are under pressure to transform due to changes in consumer dietary preferences and the emergence of new competitors in the segment. Under such circumstances, the ability to innovate products and make timely adjustments to existing business lines becomes extremely critical.
In this Nestlé financial report, the most troublesome business is undoubtedly the product of Yinlu in the Chinese market.
Currently, Greater China sales account for 8% of global sales, making it the second largest market for Nestlé. However, sales of peanut milk and Babao porridge of the Yinlu brand continued to decline. During the annual report call, Nestlé CEO Mark Schneider said that Nestlé had previously stated that Yinlu put pressure on performance in 2019, mainly involving categories including peanut milk and porridge.
Schneider said that Germany “has previously indicated”, referring to the 2019 Q3 financial report, which mentioned that although the original local businesses such as Babao Porridge accounted for two-thirds of Yinlu’s sales, its current sales are Is in a down state. At the time, Schneider said that their sales were “very disappointing” and that Nestlé was working to resolve the conditions encountered by Yinlu’s business.
After peanut milk and eight-treasure porridge appeared to be “outdated”, Nestlé’s measures against Yinlu included adjusting management and adjusting product lines. In January 2020, Yinlu Food welcomed Sun Yinong, the new CEO. He previously worked at The Coca-Cola Company, joined Yinlu in 2016 as Chief Commercial Officer, and was promoted to Chief Operating Officer in 2018. It is worth noting that this is also the first Chinese CEO appointed by Nestlé after acquiring Yinlu.
In terms of products, Yinlu will welcome more new products in the future. In June 2019, Yinlu launched the first botanical beverage brand “Shiqucaotang”, which includes three single products such as chrysanthemum plant drink, Luo Han Guo drink and bamboo cane grass root. In addition, according to the previous Q3 financial report, the remaining one-third of the sales of the Yinlu brand came from the ready-to-drink coffee business introduced by Nestle. At present, Yinlu only contracted the foundry of the ready-to-drink coffee business. However, from the current attitude of Nestlé actively trying new categories, it is not impossible to directly launch Yinlu brand coffee in the future.
Work hard to try a new giant
In order to keep up with changes in consumer tastes faster, the 154-year-old world’s largest food giant wants to be as flexible as possible and innovate quickly, which is highlighted from its 2019 annual report Business is enough to see-
In 2019, Nestlé’s performance is particularly prominent in pet foods. Pet foods represented by Purina, its brand, have driven Nestlé’s global growth last year;
After reaching a permanent global license agreement with Starbucks in 2018, the incremental sales of Starbucks products sold by Nestlé in 2019 will exceed 300 million Swiss francs (about 2.14 billion yuan);
Vegetarian burgers are also mentioned in this earnings report as they are “fashionable”, with close to 2 sales of other plant-based productsBillion Swiss francs (about 1.43 billion yuan).
In addition, Schneider also said during the conference call that he remains optimistic about 2020 and still hopes to acquire high-value products (such as Starbucks coffee series, plant-based burger and meat business, etc.) to promote Nestlé. growth of.
Nestle is still so anxious: How can you make yourself younger, healthier and more “timely”? Faced with such a question, the rest of the food companies may be looking forward to the answer of the industry boss.