Nestle Annouces New Health-Oriented Strategy as Sales Rise

NestleNestle (NSRGY), the world's largest food company, announced a 4.1% sales increase over the past nine months, topping analysts estimates. The company celebrated the good news by unveiling a new strategy to become the world's largest nutrition, health and wellness company at a press briefing on Friday.

Probably best known for its chocolate offerings like Kit-Kat and Nesquick, the company will use its dominant brands in the areas of bottled water, adult and children's nutrition and prepared foods to fuel future growth as the world combats health epidemics connected with obesity and diabetes.

Nestle owns some of the top brands in several categories, including Poland Spring and Perrier in the water space, PowerBar and Jenny Craig brands in adult nutrition, Gerber in children's nutrition and Stouffer's, Lean Cuisine, Hot Pockets and DiGiorno in prepared foods. The company's Purina brand also dominates the pet food market.

With so many well-recognized brands, it's not surprising that the company enjoyed growth in all regions of the world and in all categories over the first nine months of 2010. Sales over the first nine months grew to 82.8 billion Swiss francs, even as the company operated in a diffilcult economic environment. Growth was fueled by advances of 11% or more in emerging markets and BRIC nations.

The strong positive performance allowed the company to confirm its full-year projections for its food and beverage businesses of 5% organic growth with an EBIT margin increase in constant currencies for 2010.

Nestle stock dropped $1.27 or 2.3% on the news in early afternoon trading Friday.

Nestle CEO Paul Bulcke said his company was positioning itself to serve the potentially $100 billion market being created for food products that help people avoid diabetes and obesity. The market in the U.S. is already taking shape, as the company said nearly 20% of children aged 6 to 11 in the U.S. are now classified as obese and rates of Type 2 diabetes are increasing. The company announced the formation of the Nestle Institute of Health and Science in September to establish a link between food and the science of good health. This could lead to changes that could make food products healthier, such as removing sugar while maintaining taste. The company is also pushing a new marketing slogan: Nestle: Good Food, Good Life.

Investors will soon determine whether the new strategy means good returns.

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ldmerriam

Nestle is blurring the food/pharma line... here's an oldie on consumers' thoughts about Cheerios when the FDA targeted them for selling the cereal as a drug: http://bit.ly/aKV4gv

October 28 2010 at 1:22 PM Report abuse rate up rate down Reply
jdrumerrnr

I'm sorry but people buying bottled water cracks me up.

October 23 2010 at 8:54 AM Report abuse +2 rate up rate down Reply
eyeforeye42

Better foods, bigger campaign, higher prices, higher profit margin. That is marketing. Smart people do the better food at as low a price as possible and pass by the big names. That is shopping. Hope more people shop for good food cheap and that is how the big companies lower their prices to compete.

October 23 2010 at 4:54 AM Report abuse rate up rate down Reply
okitori

Is anyone else sick and tired of having Michelle Obama, the environmentalists and the greenies dictating what you can and cannot eat. They need to spend their time informing parents of obese children or encourage the health care providers to do this. But PLEASE--don't restrict my sugar, salt, sodas, fries, fast food, etc. This is not the responsibility of government. Leave us alone--advise if you wish but do not dictate. I'd love to see what the menu is for the Obama's during any week! Just interested in what our tax dollars are paying for--I'll bet their girls are not eating burgers with carrots & brocolli--and Michelle has gained weight since entering the WH so guess she is enjoying her dining.

October 23 2010 at 1:10 AM Report abuse -3 rate up rate down Reply
2 replies to okitori's comment
jdrumerrnr

Walmart still has plenty of crap for you to buy.

October 23 2010 at 8:55 AM Report abuse +1 rate up rate down Reply
jdrumerrnr

Quit listening to Limbaugh

October 23 2010 at 8:55 AM Report abuse +1 rate up rate down Reply
alexanderpenn

It can be hard to tell where the food originates. If it is China there may be hidden ingredients. I do not believe the food is checked.

October 22 2010 at 11:39 PM Report abuse +2 rate up rate down Reply
Karen

Nestle and health should not be used in the same sentence. It's a marketing ploy. They will probably be using "natural" products like GMO and MSG.

October 22 2010 at 11:36 PM Report abuse +1 rate up rate down Reply
alexanderpenn

Maybe the plan is to try to shed the image of chocolate made in china

October 22 2010 at 11:32 PM Report abuse rate up rate down Reply
alexanderpenn

If the chocolate is made in china that means they fired Americans fed them to the wolves and put American lives at risk because the Chinese may have stuff in their food that would make Upton Sinclair upset.

October 22 2010 at 11:29 PM Report abuse +1 rate up rate down Reply
alexanderpenn

Is this the company that has chocolate made in China?

October 22 2010 at 11:23 PM Report abuse +1 rate up rate down Reply
Dennis

Congrats to Nestle More food companies should follow there plan. We might all be a little healher

October 22 2010 at 10:13 PM Report abuse rate up rate down Reply