Nestlé prepares for the recovery

Posted by Daniel Palmer on 8th September 2009

Nestlé is planning to continue increasing marketing spend in anticipation of a faster than expected upturn in the global economy, CEO Paul Bulcke has said at the opening of the company’s new luxury chocolate research centre.

The ‘Chocolate Centre of Excellence’ is designed to assist Nestlé in their drive to gain a larger share of the premium and luxury chocolate segment. The Centre combines a team of Nestlé specialists, from fine cocoa bean scientists, sensory experts and chocolatiers to packaging designers and consumer specialists, with a panel of independent chocolatiers such as Pierre Marcolini, Tristan Carbonatto and Roger von Rotz.

“The investment of CHF 25 million (A$27.6m) underlines the strategic importance Nestlé attributes to its chocolate business, especially in the premium and luxury segment,” the company said.

Mr Bulcke noted that the economic downturn had not made much of a dent in the sales of premium chocolate and is confident that demand will continue to rise – particularly for dark chocolate.

Recovery preparation 

Nestlé’s Chief Executive, speaking to Reuters at the launch overnight, advised that the Swiss maker of Kit-Kat’s and Nespresso could see its nutrition and developing world businesses as catalysts for growth. They were also more hopeful about the developed economies and are increasing marketing spend to capitalise on the predicted recovery.”You read about these green shoots and then you read that these shoots don’t blossom, but I do believe we’re going to come out of this a little bit faster than we thought,” he told Reuters. “The developing world and emerging markets in general are showing nice signs of (reviving)… Europe is going to take a little bit longer.”

Mr Bulcke expected to see a pick up in sales growth from the first quarter given that the back half of last year would provide an “easier comparison”, but underlying sales growth for the full-year has been reduced to about 4.1 per cent.

Mr Bulcke also reiterated that the company had no immediate plans for a major purchase, although he did not rule out a counterbid for Cadbury in the wake of Kraft’s approach.