Why rising commodity Nestle or Danone nor n'inquiète
Source: Tribune.fr
- 18/02/2011 even in developed countries.
raw materials whose prices soar, consumers still hesitant in developed countries: the European food giants have some reasons for concern for fiscal 2011. Apparently it is not. This week, Franck Riboud and Paul Bulcke, CEO of
Danone and Nestle, have instead shown a great confidence for this year, underpinned by good growth in 2010 earnings, as sales on profitability. Optimism based on several elements.
First, both groups have amply demonstrated their ability to respond to the languor of consumption in developed countries.
Danone frankly played for two years on lower prices and higher volumes. Objective: Reduce the price gap between its products and those brands and thus regain a few points of market share. A strategy which reads in its 2010 earnings fresh dairy products division (volumes have increased by 7.5% in one year, and sales of 6.5% only) and its mineral water (7 , 8% growth in volume for 5.3% increase in turnover), two highly competitive business. lot more diverse, with over 10,000 products in its catalog ranging from candy to coffee to dairy products, frozen food or water, Nestle is very discreet about the variations in volumes sold. But the Swiss giant acknowledges that increased spending by 13.2% in consumer marketing. And he continued to bet on its core values, such as Nespresso growing over 20% in 2010 and now represents over 3 billion Swiss francs in sales (a total of 104.6 billion francs) . To offset these
efforts towards the consumer in an environment of rising raw material, both groups improved their industrial processes and hunted unnecessary costs.
Danone
displays 500 million euros in savings in 2010. And Nestlé claims to have reduced by 20 basis points its distribution costs (in mineral water and ice in particular) and by 70 basis points of its administrative costs.
Beyond these efforts
punctual
Danone and Nestle
rely on changes in consumer eating habits. Noting for example that the average American consumes only 5 kg of dairy products per year, against about 30 for French,
Danone seeks to persuade the United States benefit from yoghurt. Class and also the country in the list of his ... emerging. Nestle him, welcomes the strong performance of Nescafé in Japan, a country very consumer of tea, but he has sold 500,000 machines Nescafe Dolce Gusto.
Both groups have also invested heavily in recent years on the segments that remain carriers, even when consumption goes down. This is particularly true of infant nutrition Medical and very dynamic in developed countries as in emerging markets.
Danone has entered this sector in 2007 by acquiring Numico, having just sold its LU biscuits to Kraft. There made last year a quarter of its total turnover, with an operating margin close to 20% (against 15% for the whole group). Nestle, for its part, has made 10% of its 2010 sales in the nutrition business, with, again, a nice margin of 18.1% against 13.4% for the whole group (excluding Alcon ).
Finally, especially
Danone and Nestlé can rest assured thanks to the fantastic growth potential in emerging countries. To conquer these millions of new consumers, they adapt products, recipes and formats to the tastes and budgets of the Chinese, Indians or Russians. And further acquisitions or partnerships. With the acquisition of Unimilk last summer