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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Nestlé S.A.    NESN   CH0038863350

NESTLÉ S.A.

(NESN)
  Report
Delayed Quote. Delayed Swiss Exchange - 11/27 06:41:19 am
102.38 CHF   --.--%
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Consumer companies pitch discounts, bargain products as economic malaise looms

10/27/2020 | 06:41am EST
FILE PHOTO: A cashier works behind a protective plexiglass shield at a supermarket in Sydney

(Reuters) - Unilever, Procter & Gamble and other major consumer goods manufacturers are touting lower-priced brands, smaller packages and discounts to woo penny-pinching shoppers struggling through the most severe global recession since the Great Depression of the 1930s.

Nestle told Reuters earlier this month that it has recently launched single-use sachets of Maggi seasonings in Indonesia and smaller sachets and cooking sauces in the Philippines. The world's biggest packaged food company is working on "enhancing the meatiness of its bouillon" for when meat itself becomes a luxury, Nestle head of culinary products Agnes Lalanne said.

It also is promoting recipes that call for cheaper proteins like eggs and canned meat in the Philippines.

"We'll give this (affordable products) more emphasis," Nestle CEO Mark Schneider  said  last week after reporting third-quarter sales,  "because affordability, especially when it comes to the economic consequences of COVID, will become ever more important." 

Unilever, which markets food and consumer products in 190 countries, said it is making sure every market has low unit-price packages and cheaper brands.

On a conference call with reporters last week, Chief Financial Officer Graeme Pitkethly said the maker of Hellmann's mayonnaise and Lipton tea launched new variants of its Savital shampoo, which is priced below its Dove and Tresemme brands, in Latin America.

Consumer product companies usually pass along price and "promotional allowances" to a retailer, which then uses it to offer limited-time promotions such as 2 for $5 value deals, or everyday low prices.

Many companies initially pulled back on price-focused promotions, such as 'buy one, get one free,' in March and April when coronavirus-related shutdowns drove shoppers to hoard everything from hand sanitizer and cleaners to toilet paper and flour.

The demand spike strained supply chains and all parties just focused on keeping stores clean and shelves stocked.

PRICE PROMOTIONS

Chef Boyardee pasta maker ConAgra told Reuters it has increased price promotions, though not to pre-COVID levels, since early spring on products such as Pam cooking sprays, Bird Eye frozen vegetables and Marie Callender pies.

PepsiCo said it would spend more on brand advertising and marketing during the U.S. holiday season.

Unilever said on an earnings call it had reactivated promotion plans with retailers after effectively suspending them during the first and second quarters.

Tide detergent maker Procter & Gamble brought back promotions in most categories in the United States, except where demand remains high, like for its Charmin toilet paper and Microban 24 disinfectants.

As  COVID-related costs rose, companies including P&G  managed to raise  prices  as stimulus in countries such as the United States kept cash registers ringing.   But a $600 weekly U.S. federal aid program ended in July and prospects for any follow-up government stimulus look bleak.  

"Consumer spending levels are not going to recover until at least end-2022, so there is going to be a sustained pressure on consumer-packaged goods companies to offer promotions and incentives," said Oliver Wright, Accenture's global industry lead of consumer goods and services.  

By the end of September, about 26%  of  U.S. grocery items purchased featured a price promotion, according to Nielsen data, below the 31% average in the one year to Feb. 29, 2020.

The global economy has weakened with millions out of work.

In the United States, one of the biggest markets for packaged goods,  personal income levels dropped 2.7% in August,  according to the Commerce Department.  Consumer  spending  rose only 1% in August after rising 1.5% in July, and consumption remains 4% below pre-pandemic levels.

Per-capita purchasing power in Europe is expected to fall almost 5.3% in 2020 from last year, according to data analytics firm Gfk.

  According to a survey by consumer insights firm Reach3, 30% of U.S. respondents reported buying more  in-house, store-brand products in June compared to March,  and 28% were looking for less-expensive brands overall. 

(Additional reporting by Victoria Waldersee in Lisbon; Editing by Vanessa O'Connell and Nick Zieminski)

By Siddharth Cavale and Martinne Geller


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
NESTLÉ S.A. -0.06% 102.38 Delayed Quote.-2.29%
PEPSICO, INC. 0.09% 144.16 Delayed Quote.5.48%
UNILEVER PLC 0.52% 4605 Delayed Quote.5.32%
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More news
Financials
Sales 2020 84 945 M 93 610 M 93 610 M
Net income 2020 11 697 M 12 890 M 12 890 M
Net Debt 2020 30 184 M 33 262 M 33 262 M
P/E ratio 2020 25,2x
Yield 2020 2,66%
Capitalization 285 B 314 B 314 B
EV / Sales 2020 3,71x
EV / Sales 2021 3,68x
Nbr of Employees 291 000
Free-Float 93,5%
Chart NESTLÉ S.A.
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Nestlé S.A. Technical Analysis Chart | MarketScreener
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Technical analysis trends NESTLÉ S.A.
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TrendsBearishBearishBullish
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 117,02 CHF
Last Close Price 102,38 CHF
Spread / Highest target 27,0%
Spread / Average Target 14,3%
Spread / Lowest Target -8,19%
EPS Revisions
Managers
NameTitle
Ulf Mark Schneider Chief Executive Officer & Director
Paul Bulcke Chairman
Magdi Batato Executive Vice President-Operations
François-Xavier Michel Marie Roger Chief Financial Officer & Executive Vice President
Stefan Palzer Chief Technology Officer
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