Nestlé Sees Limited Impact from Middle East Conflict
Nestlé signaled that ongoing tensions in the Middle East could shift consumer habits in its favor, as rising inflation encourages more people to eat at home rather than dine out. However, the company also warned that higher energy and freight costs are expected to increase distribution expenses in the coming months.
The global food giant, known for products such as Nescafé, KitKat, and Maggi, stated that it has experienced “very little impact” so far from the conflict that began in late February following U.S.-Israeli airstrikes on Iran.
Full-Year Outlook Remains Intact
Nestlé maintained its full-year guidance, projecting organic sales growth between 3% and 4%, along with an improvement in its underlying trading operating profit margin compared to last year.
Chief Executive Officer Philipp Navratil noted that consumer behavior is evolving as fuel prices surge. Shoppers are increasingly opting to walk to nearby stores instead of driving, while more households are choosing to prepare meals at home—particularly across emerging markets.
He emphasized that Nestlé is well-positioned to benefit from this trend, thanks to its strong distribution networks and product portfolio tailored for at-home consumption.
Emerging Markets Drive Growth
The company reported that organic sales growth in emerging markets rose by 4.6% during the first quarter, reflecting solid demand in key regions.
Overall, Nestlé delivered better-than-expected quarterly performance, supported by increased purchases of coffee and pet food products.
Organic Sales Beat Expectations
Organic sales—excluding currency fluctuations and acquisitions—grew by 3.5% in the three months ending March, surpassing analyst expectations of 2.4%.
However, Nestlé noted that growth was temporarily impacted by approximately 90 basis points due to a recall of infant formula products earlier in the quarter. The company confirmed that product availability has since returned to normal levels.
Total Sales Decline but Meet Forecasts
Despite the strong organic performance, total reported sales fell by 5.8% to 21.3 billion Swiss francs (around $27.12 billion), in line with analyst projections.
Strategic Focus on Key Product Categories
According to sources familiar with the company’s plans, Nestlé is sharpening its focus on four core segments: coffee, pet care, nutrition and health, and food and snacking. This strategy aims to boost sales volumes without significantly restructuring the business.
Pricing and Volume Growth Show Positive Signs
Nestlé’s pricing increased by 2.3% in the first quarter, matching analyst expectations. Meanwhile, real internal growth—representing sales volumes—rose by 1.2%, outperforming forecasts of just 0.1%. Growth was primarily driven by strong demand for coffee, food, and snack products.
Analysts see this as an encouraging sign. Jean-Philippe Bertschy noted that Nestlé is beginning to regain momentum in volume growth, offering reassurance to investors and supporting management’s positive outlook following its 2025 results.
