At-Home Coffee Routines Drive Sales for Nestlé
Nestlé’s Q1 Sales Climb 7.7%
Nestlé’s first quarter sales rose 7.7%, driven by strong demand for its coffee products. The company’s coffee pods, instant coffee, and Starbucks (SBUX)-branded products were the biggest contributors to this growth. Nestlé’s Nespresso products were in particular demand during the first quarter, with sales up 17.1%.
When the pandemic hit last March, consumers in the US rushed to get their hands on as much coffee as they could, creating coffee shortages at supermarkets across the globe. As the pandemic went on and people continued to work from home, they continued to buy coffee as well as coffee machines to replicate drinks they used to order at coffee shops. This trend has driven demand for espresso machines, French presses, and pour-over brewers. Nestlé’s recent report shows that these trends have continued even as some people begin to return to offices and coffee shops.
Nestlé’s Coffee Investments Pay Off
Nestlé has been making big bets that coffee would be a growth driver. When demand for at-home coffee surged during the pandemic, Nestlé was ready. The company has sold off non core assets in recent years, including its confectionery business, and has doubled down on coffee. In 2018 Nestlé paid Starbucks $7 billion to secure the rights to sell its packaged coffee beans, single-serve coffee, and other products at grocery and retail stores. Nestlé has acquired smaller coffee brands which cater to younger consumers, including Chameleon Cold Brew.
In March Nestlé announced plans to expand Nespresso production and distribution centers in Switzerland to meet demand from consumers across the globe.
Keeping Up the At-Home Coffee Momentum
Nestlé’s biggest challenge now is keeping the growth going as some parts of the world begin to emerge from pandemic shutdowns. As coffee shops reopen and people go back to work, demand for at-home coffee may wane.
Nestlé is addressing this by rolling out new coffee machines which are touchless and safer to use in office settings. It is also launching new products and coffee flavors for the at-home market.
The company is pulling out all the stops to keep the momentum going in its coffee business. The pandemic has upended many daily routines, including how people drink their morning coffee. Nestlé and other companies are eager to see if and when coffee drinkers will return to pre-pandemic habits.
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