A look at the key points made by the Swiss food giant’s chief executive Mark Schneider during a fireside chat with Barclays
Nestlé ‘s chief executive Mark Schneider addressed investors during a fireside chat hosted by Barclays

Nestlé’s chief executive Mark Schneider has said the plant-based category is quickly transitioning away from the traditional burger, chicken pieces and hot dog products as consumers express “tremendous interest in new specialities”. 

Speaking recently at a fireside chat with Barclays head of consumer staples research Warren Ackerman, Schneider attributed the slowdown in plant-based sales late last year to consumer interest in products “levelling off”. 

“No one wants to live off burger patties, chicken pieces and hot dogs all day long,” Schneider told Ackerman. 

“Clearly diversity is the name of the game. I think we have great outlets and great brands to offer that, and also offer some of the components in prepared meals and frozen meals,” he added.

A notable decline in US plant-based sales hit headlines in Q4 last year as retail data group SPINS reported a 1.8% year-on-year decrease for the four weeks to 3 October 2021. 

At the time, Beyond Meat’s shares had taken a hit after its $106 million Q3 revenue missed its earlier guidance of $120 million to $140 million. 

During its Q4 2021 earnings call, Beyond Meat management said it believed the US retail outcome reflected three main developments, including overall slow category growth, heightened competitive activity and its own focus on finalising innovation for upcoming foodservice launches. 

During the Barclays interview, Nestlé’s Schneider said the company had long expected the “true opportunity” for plant-based to be much larger than a burger patty or a chicken piece. 

Nestle brand

Huge potential for functional nutrition as consumers seek out trustworthy brands 

Schneider also touched on the potential for Nestlé’s health science functional nutrition arm to gain market share as it proves itself as a legitimate option in the largely unregulated supplement space. 

“It’s a crowded marketplace, but also one that has a huge spectrum from low-quality suppliers that consumers have no trust in, to some of the higher-quality ones,” he said.

“The knowhow, the scale, and the investment to go into [new categories], in my opinion, is key. And then, of course, you want to market it properly to inform consumers about that benefit and the differentiation. I believe there is a way to differentiate, and consumers are basically making those decisions every day by picking our brands.” 

The business arm experienced annual organic growth of 4.3% in the first three months of 2022, driven by double-digit growth in medical nutrition. 

“It will definitely continue to go up significantly from the level where it’s at right now, both because of organic growth and also interesting bolt-on opportunities,” Schneider told investors. 

Referring to the business arm’s Q1 22 1.3% profit margin, the chief executive said: “The margin will improve over time. A lot of it has to do with investments, in particular in research and development.” 

“As the size increases, you spread that over a larger number of sales, and hence the R&D burden becomes less visible, and the margin will go up,” he added. 

Growing D2C 

Elsewhere Schneider highlighted an increase in digital revenue to 15% across the entire business in Q1 2022, with the business’s ultimate target at 25% to support the increased consumer interest in D2C opportunities. 

He touched on the 2020 acquisition of UK D2C recipe box Mindful Chef, noting it was part of a food company’s repertoire to have a D2C business.

“The track record has been mixed,” Schneider told investors, answering a question on the company’s wider D2C business portfolio. “Some of them have been performing really well; some others do have issues that we need to fix over time,” he said. 

Finally, on M&A Schneider reiterated Nestlé’s long-term M&A strategy, noting the company was looking at acquisitions in the £1 billion to £10 billion range like Bountiful. The food corp acquired supplements and nutrition brand Bountiful for $5.75 billion in 2021. 

“When someone’s asking me, would I rule out large acquisitions? Of course, I don’t rule them out but [there are] benefits to these midsize and smaller transactions,” Scheider noted. 

“The fact that they tend to be easier integration jobs, and the fact that they tend to pose less of an antitrust divestiture risk. In a world where the markets are still quite fully priced, the way to make an acquisition successful is exactly through a quick integration and then taking the business together to new heights. That’s why integration is so important,” the chief executive said. 

He also hinted at an interest in making an acquisition in India. Despite the market being “incredibly vibrant and strong” Schneider said it was also frothy and the company had to stay prudent on valuations. 

“We will continue to try and build the business through organic growth. For the right target, I would love to open the purse strings, be aggressive and be supportive. But again, it has to be financially prudent,” he concluded. 

Date published: 6 May 2022

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