Nestle eyes sweet success in Chinese market

Nestle SA, a global food and beverage giant, is optimistic about the recovery and improvement of consumption in China in the second half, eyeing in particular coffee, pet foods and health and wellness products for continuous growth, said its top executive.

Mark Schneider, CEO of Nestle SA, during his visit to attend the China Development Forum, said of the consumption market in China, “We have good reasons for confidence that we will see increasing recovery and improvement again toward the second half.”

Compared with the high inflation occurring in the rest of the world, inflation is lower in China, he said. While government policies are in place to stimulate domestic consumption, Schneider said it also usually takes a bit of time, but that it will help domestic consumption.

“The good thing about China is people are generally very prudent financially. So there’s a nice and high savings rate. When they are confident about the future, they’re able to spend,” he said.

Having spoken with some other business leaders and retail and online partners of Nestle, the CEO said he is getting a sense that “step by step, spending is getting up again”.

Schneider said that this year, the primary support for Nestle’s organic growth will come from two sources — volume, which means selling more, and mix, which means selling a more attractive profile of new and improved premium products.

Nestle has been increasing investments in sectors such as healthy aging, sustainability and digitization to address rising consumer needs more efficiently. For example, the company has introduced its N3 milk products — which offer nutrition without lactose — for the Chinese market where the fastest growing groups of people are the middle-aged and elderly.

On the adoption of artificial intelligence, the CEO said the sensibilities of AI on consumption trends will help make better and quicker decisions, he added.

Among its growing businesses in China, coffee, pet foods and confectioneries are three major sectors that will continue to see robust growth this year, given the new interest in coffee consumption and rising pet ownership locally, the CEO said.

Nestle is expected to benefit even more from its strengths in cat food. “We saw, in particular here in China, there is an interest in keeping cats, as more people have been living in apartments,” he said.

Nestle is boosting its coffee spectrum including its premium instant coffee Nescafe, its Nespresso brand system that provides coffee machines, and a branded professional unit to provide coffee services at hotels, restaurants, office buildings and universities. The company also operates high-end coffee shops in China including Blue Bottle cafes in Shanghai.

“That gives me confidence because when you look at China and the consumers, you find consumers at all price points, you find some of them that are very interested in super high-end, the best of the best. And then, of course, you do have consumers that have to watch affordability very much and we have everything for everyone,” he said.

Jason Yu, general manager of Kantar Worldpanel China, said brands should capture the trends in health and rational consumption for future growth, through integrating new lifestyles and consumption occasions and enhancing innovations to maximize experience and value.

The confectionery category has grown 5 percent year-on-year in China since 2023, according to Kantar.

“It is vital to seize the opportunities from rising consumption occasions and unleash the demand for pleasure,” said Yu.

Nestle has continuously invested in China, with 96 percent of production made locally.

Since 2020, Nestle has invested 2 billion yuan ($280 million) in China, mainly in high-end categories.