Nestlé (NESN) Barclays 19th Annual Global Consumer Conference summary

Growth performance and strategy

• Achieved four consecutive quarters of real internal growth (RIG), improving from 1.2% in Q1 to 1.8% in Q2, with coffee and pet segments exceeding 2% RIG and steady progress in nutrition recovery after an infant formula recall.

• 30% of the business is in structurally high-growth sub-categories, growing over 7% in H1, with resource allocation and execution as key drivers.

• North America, representing 35% of revenues, saw flat RIG due to weak frozen food category growth, underperformance in Gerber and Creamers, and temporary inventory phasing; interventions are underway to address these.

• U.S. pet food experienced temporary destocking as supply normalized, but strong sellout data and market share gains continue, especially in wet cat food.

• Coffee growth remains robust, with innovation in cold and RTD coffee, and targeted launches like Starbucks Refreshers Concentrate to attract younger consumers.

Regional and portfolio developments

• Emerging markets delivered broad-based, market share-led growth across LATAM, Asia, and Africa, driven by improved execution and innovation rather than underlying consumption increases.

• In China, a shift to a consumption-led model included distributor consolidation, SKU rationalization, and focused marketing, leading to stabilization and some share improvement despite ongoing category declines.

• Portfolio de-averaging increased high-growth business exposure from 10% to 30%, with dynamic capital allocation and marketing spend focused on growth areas while optimizing support for core brands.

• Reduced media investment brands from 400 to 120, emphasizing data-driven marketing mix optimization and effectiveness.

Financial outlook and operational focus

• Margin guidance for H2 expects similar performance to H1, with gross margin improvement, continued cost savings, and advertising spend maintained at current levels.

• Confident in medium-term margin recovery above 17% UTOP, supported by brand strength, innovation, and RIG leverage.

• M&A activity remains focused on bolt-ons close to core skills, with ongoing portfolio simplification and a priority on organic growth and operational execution.

• Actively adapting to AI-driven product discovery by tracking consumer prompts, optimizing data availability, and leveraging R&D depth to ensure brand visibility in large language models.

• Organization has developed a clear playbook for growth, efficiency, and value creation, with ongoing efforts to scale execution globally.