Nestlé Weathers Noodle Scare

Convershaken Staff
February 18, 2016

Despite a major health scare, Nestlé didn't slip up in 2015. The maker of KitKat, Nescafé and Nespresso was forced to clear Maggi noodles off shelves in India for five months of the year. But it still posted sales growth across all major regions and product lines in the period.

The Swiss food giant's Asia business was "seriously impacted" by the noodle debacle. After Indian food safety authorities found excessive levels of lead in Maggi 2-Minute noodles, Nestlé was forced to halt production and sales. But further testing failed to find lead or other harmful ingredients, allowing it to resume selling the product in November. 

Analysts estimate the Maggi brand brings in about $500m in annual revenues - roughly a fifth of Nestlé's sales in India. The recall meant the company's underlying sales crept up just 0.5% in Asia, Oceania and sub-Saharan Africa. Nonetheless, exclude acquisitions and worldwide sales climbed 4.2% to 88.8bn Swiss francs ($89.3bn), driving total earnings - excluding currency movements - up 7%.

Coffee and Ice Cream

The growth reflected gains across the business. For instance, Nestlé struck a partnership with UK-based R&R - producer of 99 Flake, Dairy Milk and Oreo desserts - that management expects to create "a leading player in ice cream".

Nespresso, one of the group's 'billion dollar brands', posted higher sales in all regions. That was partly due to the roll out of new capsule flavours, which drove up sales of VertuoLine coffee machines. The luxury coffee brand also benefited from a  new ad campaign starring Jack Black and George Clooney:

 

There was also robust demand in Asia for the cheaper Nescafé brand. Chinese consumers lined up to buy instant and bottled coffee, while Japanese coffee fans snapped up Dolce Gusto espresso machines and pods.

New flavours of KitKat chocolates resulted in brisk trading in Japan and Oceania. And strong sales of Pure Life, Perrier and San Pellegrino flowed into a 7% rise in water revenues to 7.1bn Swiss francs.