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Nestlé has posted a strong quarter for its coffee brands, led by significant contributions from Starbucks' out-of-home products and Nescafé line, especially in North American and Asian markets.
Global Coffee Alliance Boosts Performance
Nestlé reported positive sales developments across all its coffee brands and channels. In particular, Starbucks out-of-home and Nescafé led the way, contributing to the overall success of Nestlé's coffee business. As part of its $7.1 billion Global Coffee Alliance partnership, Nestlé holds exclusive rights to market and distribute Starbucks-branded retail packaged coffee, pods, and ready-to-drink (RTD) ranges in over 80 markets.
According to the World Coffee Portal, this alliance has been a key growth driver for Nestlé's coffee business.
Nestlé's Largest Market, North America
A press release by the Globe Newswire noted that sales of Starbucks out-of-home products in North America, Nestlé's largest market by revenue, displayed strong double-digit growth. This can be attributed to new customer acquisition and e-commerce momentum, highlighting the enduring popularity of Starbucks in the region.
Nestlé also saw robust demand for Starbucks RTD products in Asia and Oceania, particularly in South Korea, where high single-digit sales growth was observed. This further reinforces the growing popularity of Starbucks in the region.
Nescafé, another prominent brand within Nestlé's coffee portfolio, delivered strong performances across North America, Asia, Oceania, and Latin America. The instant coffee range achieved double-digit growth in Latin America and resonated well with consumers in Brazil, Nestlé's third-largest market globally.
Although experiencing a slight decline of 1.2% compared to the previous year, Nespresso showcased broad-based momentum in sales of the Nespresso Vertuo coffee pod machine. Additionally, increased sales of the office-focused Momento machine further supported the resilience of the Nespresso brand.
European Market Exhibits Mid-Single-Digit Growth
Nestlé's European coffee revenues experienced mid-single-digit growth, driven by strong Nescafé sales. Notably, the launch of Nescafé Dolce Gusto Neo paper-based pods in France and Switzerland contributed to the positive performance in the region.
While total sales for the first nine months of 2023 fell slightly by 0.4%, Nestlé anticipates full-year sales growth above 7%. The company attributes this to an average 8% product price increase, reflecting a positive outlook for its business.
Photo: Fahmi Fakhrudin/Unsplash
