Nestle S.A., Vevey, Switzerland, embraced a strategy in 2012 of making acquisitions in emerging markets that fit well with its mission of being one of the leading worldwide health and wellness companies.
“As anticipated, 2012 is already confirming itself to be a challenging year,” said Paul Bulcke, chief executive officer. “In many developed markets where consumer confidence is low, the trading environment is subdued while in most emerging markets conditions remain dynamic and rich in growth opportunities.”
Amid the emphasis on targeted international growth, Nestle experienced a top personnel change within the United States. Paul Grimwood, most recently chief executive officer of Nestle U.K. and Ireland, took the reins as head of Nestle USA. Indications were that he will continue to pursue a strategy of market expansion, cost-cutting and revenue enhancement.
Nestle’s most recent fiscal year saw profits grow 8% while sales fell 20% to 83.6 billion Swiss francs from 104.6 billion Swiss francs in fiscal 2010.
“In view of continuing economic uncertainties and volatility, we don’t expect 2012 to be any easier than previous years,” the company said.
“We are continually opening new routes to market to reach emerging consumers, and using new media to increase both our direct engagement with consumers and our return on brand investment. This approach has delivered profitable growth in both emerging and developed markets,” Nestle said in its half-year report ended in June 2012.
During the first half of fiscal year 2012, Nestle showed a turnaround from 2011, with sales in Swiss francs up 8% and a rise in profit of 9%. The Nestle Group “continued to grow in all regions of the world: the Americas achieved organic growth of 6.4%, Europe 2.6% and Asia, Oceania and Africa 12.6%. Our business grew 12.9% in emerging markets and 2.6% in developed markets,” said Peter Brabeck-Letmathe, chairman of the board, and Mr. Bulcke, in a letter to shareholders for the first half of 2012.
Nestle’s growing presence in emerging markets, along with price increases at the retail level and selective cost-cutting, helped the company expand during the first half of 2012. Nestle said it expected to post 5% to 6% organic growth in fiscal year 2012.
Nestle agreed to acquire Pfizer Nutrition for $11.85 billion in April. The Madison, N.J., company specializes in infant formula providing complete nutrition for babies from birth to six months of age. Nestle said it expected the newly acquired unit to have sales of $2.4 billion in fiscal year 2012, up from $2.1 billion during fiscal year 2011.
More focus on health and wellness occurred in September when Nestle said it was collaborating with Chromocell Corp., a life sciences company, in a sodium reduction effort. Chromocell, North Brunswick Township, N.J., will use its proprietary Chromovert technology to screen libraries of ingredients to detect those that provide similar or equally pleasing tastes to salt.
Internationally, Nestle also expanded a factory in Ponda, India, to increase production of candy products.
“Our decision to invest in a new manufacturing facility in Ponda is a clear indication that we have confidence in the region,” said Jean-Marc Duvoisin, global head of human resources.