Nestlé Pure Life ‘growth engine’ keeps waters business ticking over

By Ben BOUCKLEY contact

- Last updated on GMT

Nestlé CFO Wan Ling Martello presenting the company's FY2014 results this morning
Nestlé CFO Wan Ling Martello presenting the company's FY2014 results this morning

Related tags: North america, Nestle pure life

Nestlé CFO Wan Ling Martello says Nestlé Pure Life remains a key growth engine for the company’s Nestlé Waters business, with especially strong growth in North America, UK and emerging markets.

The world’s largest food and beverage firm reported its Full Year 2014 results this morning, with CEO Paul Bulcke claiming “strong results, building on the growth of past years and delivered in a soft trading environment”.

Group sales of CHF 91.6bn ($96.6bn) were up 4.5% on an organic basis, while net profit rose by CHF 4.4bn to CHF 14.5bn.

The increase reflects profit realized on Nestlé’s sale of an 8% stake in L’Oreal last year, and a revaluation gain made when it bought out L’Oreal’s 50% stake in the Galderma skincare business in July 2014 and created Nestlé Skin Health.

‘Our largest market, the US, remains highly, highly competitive’

Nestlé Waters posted sales of CHF 7.4bn with 5.4% organic growth, and its trading operating profit rose 9.7%, with Martello noting the business’s steady improvement over the past few years, helped by category growth in North America and emerging markets in particular.

“It’s our drive to continually improve our structural costs by leveraging our growth that has had the greater effect,”​ Martello said.

“In developed markets pricing remained difficult – no surprise. And our largest market, the US remains highly, highly competitive. Across emerging markets the double-digit growth rate was sustained with a really strong RIG [real internal growth] contribution.”

Pure Life, Buxton and Perrier perform well

Nestle Pure Life

While Nestlé Pure Life continued to be a growth engine in emerging markets, North America and the UK, Martello singled out strong local brands that delivered good growth – especially Buxton in the UK, Erikli in Turkey and La Vie in Vietnam, all with double-digit growth.

“The premium global brands Perrier and San Pellegrino had a really good year – clearly demonstrating our ability to drive value in this category,”​ she said.

In terms of Nestlé’s broader beverage portfolio, Martello said Nespresso grew in all regions due to continued investment in products, machines and services.

Today’s call also touched on the US performance to date of VertuoLine (the pods are pictured below), Nestlé’s 'large cup' coffee system launched in the States last February.

At the time Nestlé Nespresso corporate brand manager, Dianne Duperret told this site that Nespresso accounted for $300m of sales in a US portioned coffee market worth $4.9bn in 2013, but said the company saw significant growth potential.

Nespresso_VertuoLine_coffee 300

Nespresso VertuoLine makes ‘strong inroads’ in North America

“We’ve made strong inroads into the North American market, but with our significant investment into VertuoLine, we now have the right product to make an impact on the market resulting in accelerated growth,”​ she said.

Responding to a question from Jefferies analyst Alex Howson today, Nestlé CEO Paul Bulcke gave little away on VertuoLine’s performance to date, but said acceptance of the system among US consumers was high.

“There’s a high throughput from people who bought the new machine. There’s really giving good marks on the acceptance of the product…it’s something that starts in the biggest coffee market, so it has a lot of promise,”​ he said.

Nestlé said its global powdered and liquid beverages division had good growth, driven by both coffee and cocoa and malt drinks. Nescafe Dolce Gusto, premium soluble coffee, Milo and Nescau (a Brazilian chocolate beverage brand in RTD and powder versions) were standout performers.

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