Nestle Sales Accelerate as Pandemic Boosts Pet Food Demand

(Bloomberg) -- Nestle SA, the world’s largest food company, reported its fastest sales growth in five years as stuck-at-home consumers adopted more cats and dogs, boosting demand for pet food.

Revenue growth may cross the threshold of 4% and should at least match last year’s 3.6% pace, on an adjusted basis, Chief Executive Officer Mark Schneider told journalists Thursday. Analysts have forecast 3.9% growth.

Schneider is trying to deliver on his target for growth of about 4% after the pandemic forced him to delay the goal, originally set for 2020. Nestle shares fell as much as 0.7% in Zurich.

“Exceeding that bar in 2021 is not a slam dunk,” Schneider said on a call with journalists. “This is something we’re going to have to work hard for.”

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Last year’s revenue was just ahead of analysts’ expectations. Pet food surged 10%, the fastest in more than a decade. Meanwhile, Nestle has been struggling to get sales of chocolate and beverages to accelerate, and revenue has declined in China, the company’s second-largest market, on weaker demand for infant formula and because of the timing of new year celebrations.

“Medium-term confidence is growing,” said Patrik Schwendimann, an analyst at Zuercher Kantonalbank. “Nestle is on course to achieve at least 4% annual growth as of 2022 again.”

Unilever earlier this month reported fourth-quarter sales that beat analysts’ estimates after it rode out the pandemic year with consumers buying staples like shampoo and food seasonings during lockdowns. Other consumer-goods companies like PepsiCo Inc. and Kraft Heinz Co. also benefited from shoppers keeping pantries full.

Nestle’s bottled-water revenue plunged 7%, suffering from lockdowns and social-distancing measures around the world. That underlines why Nestle agreed to sell its U.S. bottled-water business to private equity firm One Rock Capital Partners for $4.3 billion earlier this week. Nestle plans to focus on faster-growing premium water brands like Perrier and San Pellegrino.

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Nestle will put more emphasis on acquisitions, though it would be wrong to declare an end to potential divestments, Schneider also said.

“We have a portfolio that needs to be adjusted to opportunities and consumer needs,” Schneider said. “We have a pipeline, and we’re interested in balancing the buying and selling in a much better way.”

Nespresso sales rose 7%, reaching 5.9 billion francs ($6.6 billion), Nestle said, adding that it’s going to start publishing separate figures for the brand again.

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