23 Nov 2018 results are in: Nestle, Danone & Unilever
The results are in and they’re impressive. The world’s largest multinational consumer goods companies, namely Nestle, Danone and Unilever, submitted their latest financials for the 2018 year, with some truly positive results.
Aside from their financial achievements for 2018, a very clear emerging trend among multinationals has also been noted: an evident growth and acquisition of health and organic products signalling a positive move into the health food arena. Here’s what to look out for in the coming months from these consumer goods giants…
Over a nine month period, the Swiss transnational food and drink giant has reported an organic sales growth of 2.8% and real internal growth of 2.3%. Total reported sales came in at 2% and a cool US $66, 8 billion for the first three quarters of 2018.
Aside from this, Nestlé has also made progressive in-roads in positioning their portfolio towards high-growth categories, such as coffee, water and nutrition.
Nestle and Starbucks
To add to their existing coffee subsidiaries, such as Nespresso, Nestlé has made the move to acquire the global perpetual license to sell Starbucks packaged goods outside of Starbucks coffee shops. The US $7.15 billion partnership deal was formalised in August of this year and means that Nestlé can sell Starbucks products such as Seattle’s Best Coffee and TeavanaTM ice-tea infusions to the other countries outside of the United States.
The company also settled upon an agreement for the sale of Gerber Life Insurance Co. which is a subsidiary of the Gerber Products Company, which itself is a subsidiary of Nestlé. The food and beverage transnational has also begun to explore a foray into Nestlé Skin Health.
Nestlé CEO, Mark Schneider on the growth and portfolio transactions of Nestlé this year:
“We have reached significant milestones in portfolio management and are particularly pleased with the early closing of the Starbucks transaction. We have also made good progress on our various cost reduction programs. Our growth and efficiency initiatives put us on track to meet our full-year 2018 guidance and 2020 targets.”
The Danone Report
While not quite as successful as their Swiss counterparts, Danone has suffered weaker sales and slower growth in the third quarter, due to reduced sales of baby formula in Chinese and Moroccan markets. However, this decline in sales comes off the back of 12 months of exceptional growth, specifically in the Chinese market. Recent consumer boycotts in Morocco which began on social media earlier this year have affected product sales in this region.
Aside from this, the French multinational has reported sales of €6.2 billion at the end of September 2018. This is a sales increase of 1.4% and a 3.3% increase in product value.
Danone has somewhat made up for the contraction of sales in Chinese markets, however, by delivering strong momentum in dairy and plant-based goods and waters. CEO and Danone Chairman, Emmanuel Faber believes this encouraging return to growth in these sectors demonstrates the company’s balance of growth across all sectors of its business.
Danone has reported that they have a strong foundation in place in order to navigate the volatile market and changes in currency, which they believe will serve as a vehicle for sustainable, profitable growth for the last quarter of 2018.
The Unilever Report
Unilever growth and sales never fail to disappoint, and for 2018, the results have been no different. The consumer goods giant reported an impressive total growth of 3.8%, with accelerated growth across all three of their divisions: foods and beverages, home care and personal care. A strong volume growth was specifically seen in the Asian market this year.
Total turnover for the multinational has been affected by 5.2% due to translational currency, while several acquisitions and disposals within the company contributed 3.3% towards this reduced turnover.
Unilever’s CEO, Paul Polman, has expressed that they were still able to increase their sales margin, despite an increase in their product prices, which reflects the strength of their brands and quality of the company’s innovation program.
The British-Dutch multinational’s financial results were delivered shortly after a minor hiccup where a decision to move out of its headquarters in the United Kingdom due to Brexit were ditched. The original idea was to concentrate solely on their Rotterdam headquarters, but the decision has since been made to remain co-headquartered in the UK as not all company shareholders carried enthusiasm for the idea.
Selling their spreads
Speaking about acquisitions and disposals, Unilever also completed the sale of their spreads business this year, which included the brands: Flora, Country Crock, Blue Band, I Can’t Believe It’s Not Butter, Rama and ProActiv. The deal was closed for a whopping US $7 billion. As such, the disposal of their spreads business has opened up an opportunity for the business to continue the acceleration of their efficiency and innovation programs.
In terms of sales of the foods and refreshment division of the business, this increased by 3.2% in the third quarter, with new ice-cream variants Kinder ice-cream and Magnum Praline helping to boost sales.
The tea division has seen good performance too, with core brands such as Brooke Bond bolstering sales in regions such as India. However, in more developed markets, black tea continues to struggle. Despite this, Unilever’s tea sector continues to grow due to profitable acquisitions of the TAZO and Pukka brands and innovation of the organic Lipton range.
Food growth has also been supported by the increase in sales of cooking products, specifically manufactured for Unilever’s foodservice business, catering to professional chefs across the globe. Knorr, one of Unilever’s most successful brands, has also begun to modernise its portfolio with the addition of organic and natural innovations as well as a ‘soup in a glass’ range. For all budding chefs and cooking enthusiasts, keep an eye on your local grocery shelves!
The big positive out of all three multinational reports is the fact that their fastest growing on-trend categories for the year have been geared towards health and nutrition. It seems the global population is catching on and implementing healthier lifestyle choices, while these multinationals build on their priority to deliver fresh, healthy, organic and nutritious food and beverages – a growing trend around the world.