Warc Blog

Nestlé boosts marketing budget

9 September 2009
VEVEY, Switzerland: Nestlé, the world's biggest food manufacturer, is planning to increase its marketing expenditure in anticipation of the end of the financial crisis, according to its chief executive, Paul Bulcke.

When the company announced its first half results, Bulcke said an "increased investment in consumer-facing marketing and R&D" would help organic growth "accelerate over the rest of this year."

He now argues that a further key motivation behind this approach will be to advance the Swiss firm's position as the overall economic climate improves, which may be sooner than previously expected.

"You read about these green shoots and then you read that these shoots don't blossom, but I do believe we're going to come out of this a little bit faster than we thought," said Bulcke.

More specifically, many emerging and developing markets are "showing nice signs", although "Europe is going to take a little bit longer."

Nestlé recently received $28 billion (€19.3bn; £16.9bn) from the sale of its 52% stake in Alcon, the US eyecare specialist, but its ceo seemed to rule out using these funds to mount a rival bid to Kraft's offer to buy Cadbury.

"We are always open for opportunities, but we have no plans for any major acquisitions in 2009 and 2010," he said.

Analysts have estimated that Nestlé's underlying sales growth will rise from 3.5% in the first half of 2009 to over 4% from July to December.

"This is what we really believe is sustainable and healthy growth taking into consideration the environment," Bulcke said.

The company has opened a new Chocolate Centre of Excellence in Switzerland, in which it has invested 25 million Swiss francs, underlining "the strategic importance" it "attributes to its chocolate business, especially in the premium and luxury segment."

Bulcke said the recession had not yet exerted a negative impact on this sector, and predicted sales would continue to grow, largely thanks to a particularly high level of demand for dark chocolate.

Data sourced from Reuters/Australian Food; additional content by WARC staff

 
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