A tale of 2 customers

When we talk about Nestlé, it’s usually tricky to pin down one reason for its performance considering that the conglomerate has a sprawling portfolio of 2,000+ brands, selling everything from cat food to candy. If some brands are doing poorly, others are typically doing well, and vice versa.

But in Q1, the Swiss-based packaged food giant reported a 6% decline in revenue. That was partially due to currency fluctuations, but also a very real deterioration in its North American region, where consumer demand waned for its frozen pizza and snack brands.

According to the company’s own metric known as “real internal growth” — essentially a measure of the volume of products that the company sells — sales volumes fell at 6 out of the 7 divisions in Q1. Its “prepared dishes & cooking aids” division fared worst of all, with volumes dropping 6.5%, offset slightly by price rises of 2.3%.

That was a theme seen across the board: price rises were one of the only thing keeping Nestlé’s sales figures up across the board. For the company as a whole, volumes dropped 2%, prices went up 3.4%, and organic growth came out at 1.4%.

Weary of inflation, consumers seem to be splitting into two factions, according to Nestle’s CEO. Many seem to want to splurge on premium products, while others want the best value possible for their buck, with fewer interested in mid-priced brands.