People are consuming less, or they’re eating less, global food and beverage market has been shrinking, outgoing Nestle Chief Financial Officer Francois-Xavier Roger said.
“People are consuming less, or they’re eating less or they’re wasting less or they’re eating more out of home,” outgoing Chief Financial Officer Francois-Xavier Roger said during a Bernstein conference. “It’s difficult to know. I don’t think it will last.”
According to the CFO, the trend poses a challenge for the industry, with factors such as shifting consumer habits and shifts in eating patterns contributing to the reduction. He goes on to say that huge consumer goods corporations have been able to grow sales by raising prices.
“If I take it by Zone, let’s start with Europe where we are today. We were actually at the beginning of the year, quite worried about the consumer in Europe in the context of a possible energy crisis and energy shortages, which actually did not crystallise. So, we are a bit more optimistic today than we were, although the consumer sentiment is still a little bit weak and fragile in Europe,” Roger said.
“In the U.S. we have been surprised so far to see a lot of resilience probably with consumers having, I think maybe valid for Europe as well, still a lot of savings from the pandemic that they could afford spending and investing on the one hand, huge subsidies in the U.S. and that is coming to an end. Both I would say the savings leftover from the pandemic on the one hand and second the subsidies, massive subsidies, by local government and federal government is coming to an end”, he further added.
“Finally in China, we can’t complain because this is the only Zone where we still had in the beginning, in the first six months of the year, positive RIG. But it’s a little bit less than what we expected. So it’s positive. There are some signs of recovery but not as strong as what we thought.”
Regarding the sustainability targets Roger said, “We are reasonably confident in the fact that we will achieve most of these targets. If you look at greenhouse gas emissions, we will reach the 20% reduction of our 2018 base by 2025”. “If you look at designed for recycle plastic for example. We are currently at 82% rate of designed for recycling. We will be with our objective of more than 95% by 2025”, he further added.
Nestle SA said the total amount of food and drink sold globally has been falling since the start of the year, highlighting the challenge for the sector.
Large consumer goods companies have grown sales through sharp price rises in recent quarters, and many have suffered declines in volumes. Nestle hasn’t raised prices much since the start of April, Roger said. US consumers have been resilient, but the end of Covid-era subsidies and savings is starting to impact consumption, the CFO said. Nestle’s China business hasn’t recovered as quickly as the company had expected.
Roger said Nestle is more optimistic about Europe, having been worried about that market’s access to energy last winter.
Roger, 61, who will be replaced by Anna Manz, the finance boss of the London Stock Exchange Group, is confident he is leaving Nestle in good shape as he takes his next “exciting” step in his career, which is yet to be disclosed. He said Nestle continues to look at deals but most of those the company is assessing aren’t “must-haves.” The food maker could make small acquisitions that would boost earnings growth, he said.
