Brand owners Nestlé and Reckitt Benckiser both report their annual figures today, and show ecommerce is very much a growing part of their businesses.
How Nestlé brands are growing online
Nespresso owner Nestlé says the shift to digital has helped it to boost sales growth in its latest financial year.
The Swiss brand organisation reports today that 14.3% of its full-year group sales took place online, when ecommerce sales grew by 15.1%. Online performed particularly strongly for Purina PetCare, its coffee brands – including Nespresso – and its Nestlé Health Science brands. These last include Garden of Life, Vital Proteins, Solar and Nature’s Bounty and are part of the group’s focus on building a global nutrition and health platform.
Overall, Nestlé’s total reported sales grew by 3.3% to CHF 87.1bn (£69.5bn) in 2021, and underlying trading operating profit by 1.4% to CHF 15.1bn (£12.05bn), with an underlying trading operating profit margin of 17.4% – down by 30 basis points on the previous year. In 2022, Nestlé expects organic sales growth to rise by about 5% and underlying trading operating profit margin by between 17% and 17.5%. The UK, Russia, Italy and France led Nestlé EMENA sales growth of 4.5% to CHF 21.1bn (£16.8bn).
Nespresso, which is ranked Top350 in RXUK Top500 research, reported sales grew by 9.1% to CHF 6.4bn (£5.1bn) as shoppers continued to buy Nespresso online, as they returned to its shops and other out-of-home channels, and bought its coffee machines – especially the Vertuo system – for the first time. Nespresso gained market share at the same time. Sales in the EMENA region grew by mid single-digits, and by double digits in the Americas and AOA.
Mark Schneider, chief executive of Nestlé, says: “In 2021, we remained focused on executing our long-term strategy and stepping up growth investments, while at the same time navigating global supply chain challenges. Our organic growth was strong, with broad-based market share gains, following disciplined execution, rapid innovation and increased digitalization. We limited the impact of exceptional cost inflation through diligent cost management and responsible pricing. Our robust underlying earnings per share growth shows the resilience of our value creation model.”
Reckitt Benckiser on investing in digital
Reckitt Benckiser Group, UK owner of brands from Finish to Durex, says today that net revenue from ecommerce – excluding its China business – grew by 17% in 2021 and now accounts for 12% of group net revenue. On a two-year comparison, ecommerce sales were 85% ahead of where they were in 2019. That’s put down to investment in digital that has driven “continued high growth in our ecommerce platforms”.
The update comes as Reckitt today reports full-year net revenues of £13.2bn for 2021. That’s down by 5.4% on the previous year, although like-for-like sales – that strip out business and store openings and closures – were 3.5% ahead of last time, and 17.4% ahead of the pre-pandemic year before that. Pre-tax losses came in at £260m – after losses on the sale of Scholl for £164m and EnfaBebé for £69m are included. Net losses in its continuing operations came to £52m.
Online sales were particularly strong in Reckitt’s hygiene division (+28%) – including at dishwasher tablet brand Finish, where “ecommerce significantly contributed to the brand’s success”. Sales also grew in its intimate wellness division, where brands include Durex and KY, thanks to a “renewed focus on execution fundamentals, innovation, investment behind omnichannel growth across ecommerce and new ‘impulse access models’. In its personal care portfolio, online sales of brands including Veet grew by high single digits.
Reckitt Benckiser includes in its ecommerce sales both those that its brands make direct to consumers, and its estimates of the proportion of sales that its wholesale customers – both retailers and omnichannel distributors – make online.
Reckitt Benckiser chief executive Laxman Narasimhan says: “Our journey to rejuvenate sustainable growth is well on track as evidenced by strong LFL growth of 3.5% in 2021, building on the outstanding growth in 2020, for a two-year stack of 17.4%.
“Over the last two years, we’ve significantly strengthened our business. Our innovation pipeline is 50% larger, our brands are stronger and more relevant, and our ability to serve our customers and consumers is greatly improved. We’ve taken Reckitt’s strong performance-driven culture, with its unique sense of ownership, and are evolving it for the better. We’ve also been active in managing our portfolio, repositioning for faster growth.
“The business is showing positive momentum with 62% of our core CMUs holding or gaining share, underpinned by the investments we have already made. We are therefore targeting both growth in LFL net revenue and an increase in adjusted operating margin in 2022, despite an unprecedented inflationary environment and ongoing uncertainties created by Covid.
“We have a unique portfolio of trusted, market-leading brands in structurally attractive categories with significant headroom for growth. This, combined with our progress to date, gives me the confidence in both our near term and medium-term prospects.”
Hear more about the Reckitt Benckiser ecommerce strategy in the recent RetailCraft podcast, Unlearning to relearn, featuring Greg Duce, area ecommerce director, for Europe, Australia and New Zealand at Reckitt Benckiser.
