Nestlé's strongest quarter in 5 years — puppy food is the new profit puppy
Love the smell of Nesquik in the morning... Nestle, the world's largest food company, reported a sweet 4.3% quarterly sales growth — its best in nearly 5 years. The food/bev giant makes recognizable staples like Hot Pockets, San Pellegrino, and pretty much anything that begins with "Nes" (presso, tea, cafe, quik).
- Like its packaged foodie peers, Nestle got a boost from the panic-buying surge (DiGiorno pizza is them). Plus, it's lucky enough to own Toll House at a time when US frozen cookie dough sales are up 454%.
From Kit Kats to real cats... Nestle's corona-strength may lie in its fastest growing product category: pet food.
- In 2019, Nestle's Purina PetCare saw 7% organic growth and $14B in sales, beating all of Nestle's other (human) product categories.
- This quarter, Purina sales soared a whopping 14% in North America.
- On April 1, Nestle scooped up London-based pet food brand Lily's Kitchen — a more "premium" (read: more expensive) label than Purina, to cater to those posh cats and dogs.
Pet food is Big Food's (accelerating) trend... That's why consumer goods companies like General Mills and J.M. Smucker have spent billions to acquire pet food brands. While US pet ownership has consistently increased over the years, it's accelerating in the corona-conomy. Animal fostering is up 90% in some cities and Chewy.com stock is at an all-time high. Americans are taking in more pets (and pampering them more).