VEVEY, SWITZERLAND — Strong performances in the categories of coffee and plant-based products boosted Nestle SA sales in the fiscal year ended Dec. 31, 2021, but rising input costs cut into operating profit. The Vevey-based company expects to continue taking pricing actions on coffee and other items to alleviate inflation in 2022.
Operating profit for the year was 11.68 billion Swiss francs ($12.70 billion) in 2021, which was down 20% from 14.8 billion Swiss francs in 2020. Underlying trading operating profit was 17.4%. Sales increased 3.3% to 87.01 billion Swiss francs ($94.69 billion) from 84.34 billion Swiss francs. Organic sales grew over 7%. E-commerce sales jumped 15% in the year and now account for more than 14% of total companywide sales.
Sales of plant-based food products increased by double-digit percentages in 2021 to hover around 800 million Swiss francs ($870 million).
“I think here, our foray into specialties has really paid off,” said Ulf Mark Schneider, chief executive officer, in a Feb. 17 earnings call. “So we're not just offering the plain, straightforward products, such as burger patties and chicken pieces, but rather we go into specialties. Just think about, for example, our tuna or shrimp plant-based alternatives.”
Coffee, fueled by the brands Nescafé, Nespresso and Starbucks, was the largest contributor to organic sales growth. Sales of Starbucks’ products increased 17% to reach 3.1 billion Swiss francs ($3.4 billion).
Most of the material increases in 2022 will come from coffee and metals, said Francis-Xavier Roger, chief financial officer. When compared to 2021, the impact of cost inflation this year, particularly in the first half, is expected to be “significantly higher,” he said. Nestle in response will take actions such as pricing, operating leverage and efficiencies, he said.
Price increases at Nestle companywide reached 2% in 2021, accelerating to 3.1% in the fourth quarter, he said.
“We have proactively and responsibly addressed inflationary pressures and steadily increased prices over the course of 2021,” Mr. Roger said. “The strength of our brands, product differentiation and leading market positions enhances our ability to pass through pricing. So far, we have not seen any material evidence of demand elasticity, and we are closely monitoring for any signs of change. Volume growth has remained above pre-pandemic levels over the last several quarters.”
In another product category in 2021, prepared dishes and cooking aids achieved high single-digit sales growth behind sales of Maggi, Stouffer’s and Lean Cuisine. Mid-single-digit growth in dairy came through demand for premium and fortified milks, coffee creamers and ice cream.
Confectionery sales increased by a high single-digit rate thanks to sales of KitKat and gifting products. Premium brands and recovery in out-of-home channels boosted Water to high single-digit growth. Sales dropped in Infant Nutrition, which was impacted negatively by a sales decline in China and lower birth rates globally.
Purina PetCare posted double-digit growth, led by the brands Purina Pro Plan, Fancy Feast and Purina One. Double-digit growth in Nestle Health Science reflected strong demand for vitamins, minerals and supplements as well as healthy-aging products.Nestle in 2022 expects organic sales growth of about 5% and an underlying trading operating profit margin between 17% and 17.5%.