Nestlé backs marketing to show results

Food giant Nestlé is once again investing in marketing spend after cutting back during 2022 because of supply chain constraints.

CEO Mark Schneider told a Q2 earnings call that such spending, along with a program of portfolio optimisation and fewer price increases, would help bolster the company's volume sales. And his CFO is fully on board: “We value consumer-facing marketing investment as a key growth driver supporting our brands and innovation,” said Francois Roger. 

Why it matters
Marketing is crucial to building brands that can sustain demand in tough times. “Demand elasticity and consumer down trading remained limited in the context of pricing actions,” Roger reported. 

Takeaways 

• Q2 spending levels were “significantly above last year’s level”, said Schneider. “We will continue to invest in a very robust manner in the second half of 2023.”
• Roger flagged an increase in spending of at least 100 basis points in H2, with further increases to follow in the future.
• Nestlé says it continues to be affected by capacity constraints in the pet care and water categories. 
• Nestlé claims to be approaching 96% deforestation-free sourcing for palm oil.

Sourced from Seeking Alpha