Nestlé, the company behind Nescafé, Aero and Nesquik brands, is losing ground in the US to rival brands and private-label products, according to Bernstein Research.
Nestlé has lost market share in almost every category including packaged milk, ice cream and baby food over the past three years in the US, according to the Bernstein study of Nielsen market data.
The US is Nestlé’s biggest market, with approximately a quarter of its revenues coming from there. According to Bernstein, around a quarter of Nestlé’s US revenue comes from pet food, with bottled water accounting for 15%, frozen prepared food for 15% and ice-cream 10%.
Its product categories lost 75 basis points of market share during the first half of 2012, following an 85 basis point decline during the last six months of 2011.
Nestlé’s dwindling market share has been attributed to private-label products winning share from the Swiss-based company in the frozen pizza areas, Unilever taking market share in salad dressings, Green Mountain Coffee Roasters in the coffee market and Abbott Laboratories in the US baby food market.
“The trends have been worrisome for Nestlé for some time and are getting worse,” says Bernstein’s lead analyst Andrew Wood. This could lead to Nestlé’s sales growth missing its long-term target of 5-6% in the coming quarters, he said.
According to Bernstein, US sales could decline by 1-2% during the final three quarters of 2012, following just 1% growth in the first quarter.
“We believe that pricing will roll over but volumes will not recover enough to compensate, leading to slowing organic growth throughout the balance of 2012,” adds Wood.
The news comes shortly after Nestlé named Paul Grimwood as chairman and chief executive of its US operations, replacing brad Alford who will retire in October after 32 years at the company.
In April this year, Nestlé agreed to acquire US pharmaceutical giant Pfizer’s baby nutrition business for $11.85bn, giving it the opportunity to expand its presence in China.
Jenni Baker, London
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