Nestle is flat despite ads

NESTLE Australia, the local offshoot of the global food conglomerate whose brands include Nescafe, Nespresso, Milo, Allen’s lollies, Kit Kat and Purina pet food, was forced to ramp up its promotional campaigns in 2021 to maintain its growth trajectory.

The business was disrupted by supply chain constraints as lockdowns and border closures created a volatile trading environment.

Despite spending more to make its products competitive, Nestle only managed to maintain flat sales and profits in 2021, while disruptions to key supermarket, convenience store and shopping centre channels affected performance.

It comes amid vastly reduced occupancy levels for the nation’s office towers, which cut demand for Nestle’s popular instant coffees, coffee pods and Milo from office workers who now work at home.

Documents lodged with ASIC show that Nestle Australia posted sales of $2.37bn for calendar 2021 against sales of $2.37bn in 2020. Net profit in 2021 was $122.17m compared to $122.61m in the previous year.

Profit had risen sharply in 2020 to $122.6m from $30.7m in 2019 when $48m in impairments hit its bottom line.

It has been a rocky few years for Nestle’s operations in Australia as it is buffeted by the huge change to consumer behaviour caused by the pandemic, lockdowns and working from home.

While its coffee business suffered from the exodus of workers from city offices, the strong rise in pet ownership through lockdowns delivered boom conditions for its flagship pet food brand Purina.

According to its 2021 accounts, the flat profits were in line with management expectations. However, the company had to dig deep with extra promotional spending to keep competitive in the market while also navigating supply chain blockages.