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COVID-19 Impact on Nestle, H2 2020 Update

Nestlé’s geographical and product portfolio diversification provides the company with the necessary help in weathering the negative impact of the pandemic. Although its sales are projected to contract owing to COVID-19, growth in the food business is expected to limit the losses and provide a platform for the company to revive over the next couple of years.

What is the impact of COVID-19 on Nestle?

The US is the most affected country by COVID-19, followed by India and Brazil. Some countries in Asia are struggling with a rising number of coronavirus cases and present not so optimistic outlook for the company’s sales in 2020. As the COVID-19 pandemic is estimated to have a severe adverse impact on the non-alcoholic business compared to the food business, the company’s overall sales in North America are at risk of contraction. However, the food business contributed more than half of Nestle’s sales in Latin America in 2019. With customers stockpiling or buying more food products, the company’s sales in the region are estimated to grow despite the pandemic.

In Europe, Nestlé’s sales have been affected by the lockdowns and social distancing measures in the first six months of the year. The company has reduced recruiting in most of its streams except artificial intelligence and e-commerce. The company has launched its immunity-related probiotic products in China to capture the growing demand for these products in light of the pandemic. It also increased the use of augmented reality (AR) technology to renew and establish production lines during the ongoing pandemic.

What is the regional sales outlook of Nestle?

North America accounted for majority of the total sales, followed by Asia, West Europe, and Latin America. East Europe, the Middle East, North Africa, Australasia, and Africa together accounted for the remaining sales. The US, which is the largest contributing country for Nestlé’s sales, is still struggling to contain the coronavirus spread and death toll. As a result, the company’s overall sales projections in North America are negative, although the food sector is likely to provide some resilience. Latin American countries were hugely impacted by the pandemic. Five countries out of the top 11 most affected countries are from the region.

Countries in Asia, such as Japan and Philippines, among others, are also witnessing a growing number of COVID-19 cases hurting the growth prospects of the company. European countries succeeded to some extent in pulling down the curve of COVID-19 cases during June-August. However, with a decline in sales through out-of-home channels, the outlook for the company’s sales in the second half of 2020 is not so optimistic. Pasta and noodles, bakery and cereals, dairy and soy foods, other canned foods, and other frozen foods are estimated to grow across all the regions. Sectors in non-alcoholic beverages, cosmetics and toiletries, and pet care are predicted to witness a decline compared to pre-pandemic estimates.

Nestle sales, by key regions

Nestle sales, by key regions

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What are the price dynamics of Nestle by category?

The key product categories of Nestle are chocolate, baby wet meals, breakfast cereals, baby milks, packaged water, other hot drinks, take-home and bulk ice cream, baby cereals and dry meals, milk, and condiment sauces. Prices for several of these brands have increased, particularly condiment sauces, take-home and bulk ice cream, and breakfast cereals and milk. These may be displaying the increase in at-home consumptions in which consumers stocked up on essential commodities during the pandemic.

Nestle price dynamics, by key categories

Nestle price dynamics, by key categories

For more key category insights, download a free report sample

Market report scope

Key categories Chocolate, Baby Wet Meals, Breakfast Cereals, Baby Milks, Packaged Water, Other Hot Drinks, Take-Home and Bulk Ice Cream, Baby Cereals and Dry Meals, Milk, and Condiment Sauces

Scope

  • The company’s geographic and product diversification is to assist Nestlé in warding off the negative effects of COVID-19 and bounce back in the near future.
  • The company’s top-line performance is at risk of contraction in 2020 owing to COVID-19.
  • The soft drinks sector, particularly water categories, is the most affected by the pandemic.
  • Americas to drive Nestlé’s food business growth despite COVID-19 exposure.

Reasons to Buy

  • Understand the challenges and opportunities faced by a specific company in order to tap into what is really impacting the industry.
  • Gain a broader appreciation of the fast-moving consumer goods industry by gaining insights from both within and outside of your sector.
  • Access valuable strategic take-outs to help direct future decision-making and inform new product development.

Key Players

Nestlé

PepsiCo

Unilever

Table of Contents

Table of Contents

COVID-19 impact analysis on Nestlé – Key findings as of 03rd September 2020

Geographic spread analysis – COVID-19 vs Nestlé brand sales

The impact of COVID-19 on Nestlé’s regional sectors

Nestlé’s 2020 exposure – brand sales at risk by region and industry

Nestlé’s 2020 Non Alcoholic beverages business exposure – $5.1 billion at risk

Nestlé’s 2020 Food business exposure- $1.9 billion to gain

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Frequently Asked Questions

The key product categories of Nestle are chocolate, baby wet meals, breakfast cereals, baby milks, packaged water, other hot drinks, take-home and bulk ice cream, baby cereals and dry meals, milk, and condiment sauces.

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