Shares in the world's biggest food company were down by around 2% this morning as Nestlé announced its slowest sales growth in four years and missed profit expectations for 2013.
Nestlé CEO Paul Bulcke said the firm's nutrition, health and wellness business is core to the firm's long term success, as it battles with ongoing challenges in the global market. The Switzerland-based food giant revealed below expected annual sales growth of 4.6% for the year 2013, as it battled against a slowdown in emerging markets and continuing sluggishness in many developed countries.
Despite a strong final quarter (reporting organic growth of 5.2% in the fourth quarter of 2013), Nestlé CEO Bulcke said that growth for the full year was below its own long-term goals of between 5% and 6% growth year on year.
"Last year was challenging and 2014 will likely be the same," said Nestlé. "We therefore expect our 2014 performance to be similar to last year and again weighted to the second half, outperforming the market, with growth around 5 percent and improvements in margins issuing a warning that 2014 will provide similar challenges for the company."
Speaking to investors and media this morning during its full year report conference, Bulcke reiterated that nutrition, health and wellness remain at the 'core' of Nestlé's strategy, noting that an 8.2% growth in this area has been a key driver for the firm's ability to hold its leading market position despite 'challenging' situations in both emerging and developed markets.
"It is what we are all about as a company," said Bulcke. "It is one of the strongest value drivers, explained and expressed in profitable growth, that is behind our success and our results."
Indeed, he commented that Nestlé's strategy in nutrition, health and wellness is driving a 'competitive advantage' for the firm in the global market all the way through its nutrition, food and beverage portfolio - adding that despite a slow-down in growth the firm continues to 'out-perform the market' in these areas and especially in infant formula where 'strong growth' was reported.
"It is indeed the most strong and most valuable value driver, expressed profitable growth and margin increases, that we have," confirmed the Nestlé CEO. "That is linked with also trends in society, the population growth, middle class building up in emerging markets. It is linked with an aging population, it is linked with consumers that are more aware of the nutritional dimensions in their lives and the need for quality of life."
"Linking up of all these dimensions is what nutrition, health and wellness is all about," said Bulcke - adding that the strong growth of 8.2% seen in its nutrition business has been driven by research and development and new products.
Research, reformulation and innovation
"We have been saying that we want to turn our portfolio - each product, everywhere, wherever in the world - through that process of checking on taste and being preferred on taste, and yet at the same time having arguments on nutrition, health and wellness," Bulcke said - noting that such a strategy requires 'a tremendous effort' and a big spend on research and development.
"Last year we have reformulated just like that 8,000 products - just last year. And if you add it all up, one third of our products are actually in that process."
The Nestlé chief also noted that it has 'redefined' its commitments to levels of salt, sugar, and trans- and saturated fats in its products - adding that such commitments are also driving reformulation and success in Nestlé's food and beverage portfolios.
"A commitment has to be fulfilled, and that is also driving quite a lot of innovation - quite a lot of research and development that is framing our portfolio quite drastically."
In addition, the he noted that the firm remains committed to micronutrient fortification on a global scale, adding that the addition of nutrients to many of its products that are potential carriers for fortification is an "intrinsic part of our agenda" that will help to create added value and premiumisation of products.
Indeed, Bulcke said that 2013 had been a 'record' year for innovation and development within Nestlé - adding that many of the products are yet to be rolled out on a broader scale.