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Innovation and e-commerce drive Nestle

News, 21 February 2017
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VEVEY: Nestlé, the Swiss food and drink giant, is focused on product and business innovation to drive future growth, two top executives have said.

"We are very much in the business of innovation," stated chief financial officer François-Xavier Roger during an annual earnings call.

The best illustration of this, he said, is "the fact that about 30% of our sales are coming from products that were not in the market three years ago or that we renovated over the last three years."

Examples include Les Recettes de l'Atelier, a premium chocolate, whose sales grew 22% across eight European countries in 2016, and Coffee-mate Natural Bliss, a coffee creamer with no artificial ingredients, that grew 42% in the US last year.

A high level of product innovation, suggested CEO Mark Schneider, meant there was "a significant opportunity here to meet changing consumer tastes".

Nor are his innovation ambitions limited to the products Nestlé manufactures. "When you put together digital opportunities in the business model innovation, I think there are many opportunities to add a service layer to our products or to engage in a direct conversation with our customers around the globe and intensify that relationship," said Schneider.

One way it is doing this, is via e-commerce. In 2016, reported Roger, "we reached almost 5% of our total sales coming from the e-commerce channel while it was at 2.9% in 2012.

"E-commerce sales grew last year by 18%," he continued, "which is six times faster than our average growth." He added that if Nespresso was taken out of the equation – the coffee brand has a longer e-commerce history, so its growth is inevitably slower – then e-commerce sales had grown even faster, at 34%.

Of the split between traditional marketing expense versus digital, Schneider said: I think we have firmed up digital significantly and we're seeing good traction, good progress on that."

Data sourced from Seeking Alpha; additional content by Warc staff

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