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Nestle China Reports 3.5% Growth, Prioritizes Innovation and Quality to Meet Changing Demands of Local Consumers

BusinessNestle China Reports 3.5% Growth, Prioritizes Innovation and Quality to Meet Changing Demands of Local Consumers

Nestle China focuses on innovation, localization and digitalization to drive growth in coffee, infant nutrition, pet and health science businesses

Nestle China has been stepping up its efforts since January to boost its businesses of coffee, infant nutrition, pet and health science, using innovation, localization and digitalization. Zhang Xiqiang, CEO of Nestle Zone Greater China, has expressed optimism about the country’s consumption capacity returning to nearly 90% of pre-pandemic levels given the resilience and vitality of the Chinese economy. The China unit of Nestle reported a growth of 3.5% in the 2022 fiscal year, supported by strong operational execution, e-commerce momentum and continued innovation.

In the past year, Nestle China saw high single-digit growth in its infant nutrition category, driven by improved market share trends for baby formula NAN and Illuma. Coffee posted high single-digit growth, led by Nescafe instant and ready-to-drink coffee. Hsu Fu Chi, a confectionery brand, recorded high single-digit growth due to innovation, including the launch of savory snacks. Culinary sales rose mid-single-digit, and Purina PetCare sales grew at a double-digit rate, with strong growth in specialty channels and e-commerce.

Nestle China will continue to prioritize premiumization and health-related products while developing major categories, with plans to roll out over 200 new products this year, according to Zhang. The company is also leveraging its strict internal food safety and quality procedures to speed up the idea-to-launch process and meet the changing demands of local consumers. Zhang said that coffee, petcare and infant nutrition are priorities on his work agenda, with a focus on high-quality, safe and healthy products.

Jason Yu, general manager of Kantar Worldpanel China, said Nestle’s direction is in line with Chinese consumers’ aspirations for health and well-being. Consumers are still willing to pay premiums for innovative products with unique benefits, according to Yu. To win big bets, FMCG players like Nestle will also have to focus on categories with broad consumer bases, Yu added. Market leaders, regardless of their origin, will have to develop clear strategies to stand out in digital commerce channels as well as penetrate lower-tier cities to unlock future growth, he said.

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