Nestlé shifts marketing focus

Nestlé is increasing its marketing spend and shifting its focus towards its “billionaire brands” that account for the majority of the food giant’s sales.

What’s happening 

• Marketing spend, which dipped to 6.6% of sales during H2 2022 amid supply chain problems, had climbed back to 8.2% by H2 2023, still below the pre-Covid level.
• Further investment is planned in 2024, but it may not be necessary to return to the pre-Covid level as the marketing mix has changed since 2019, CEO Mark Schneider told an earnings call.
• Digital media represented 68% of paid media spend in 2023, up from 55% in 2022. 
• “We are now focusing essentially on our billionaire brands that account for 70% of our sales,” said CFO François Roger. “And we do expect to extract much more efficiency out of it in terms of growth and market share.” 

Why it matters

Putting money behind big brands has traditionally involved directing significant amounts into linear TV, but as Nestlé’s shift towards digital media indicates, that’s no longer necessarily the case. A similar pattern can be seen at other large CPG businesses: Coca-Cola CEO James Qincey recently highlighted how digital’s share of the company’s media spend has doubled from 30% to 60% since 2019.

Sourced from Seeking Alpha