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Nestlé ups marketing investment, targets 9% of sales on advertising by 2025
The company's advertising and marketing spending as a percentage of sales fell from 9.0% in 2019 to a low of 6.6% in H2-2022; in 2024, this recovered to 8.1 percent
Nestlé sales in confectionery grew at a mid-single-digit pace, driven by KitKat and key local brands in the European region
Global Food & Beverages brand Nestlé has stepped up marketing investment, with an increased focus on digital spending, the company said during the 2024 earning call on Thursday. The creator of the Maggi and Nescafe brands said that it ramped up advertising and marketing investments by 40 basis points in 2024.
The company's advertising and marketing spending as a percentage of sales fell from 9 percent in 2019 to a low of 6.6 percent in H2-2022; in 2024, this recovered to 8.1 percent.
The package-food giant has targeted to reach 9 percent of sales by the end of 2025, specifically on advertising and marketing. "That means that for the full year 2025, the increase should be at a similar level to the 40 basis points increase in 2024," the company's top executive said.
In 2024, the company reported better-than-expected sales growth, driven by price increases. However, it warned of a narrower profit margin in 2025.
The sales in confectionery grew at a mid-single-digit pace, driven by KitKat and key local brands in the European region. Additionally, coffee posted mid-single-digit growth, fueled by Nescafé soluble coffee and Starbucks products.
"Coffee was the largest growth contributor with mid-single-digit growth, supported by the three leading coffee brands: Nescafé, Nespresso, and Starbucks," the company said.
Nestlé's new CEO Laurent Freixe has anticipated organic sales to be higher than last year in 2025 but has projected an underlying trading operating profit margin of 16 percent--down from 17.2 percent last year.
Separately, Nestlé's Indian arm declared its Quarter 3 result last month. The consolidated net profit improved by 6 percent to Rs 688 crore in Q3 FY25 compared to Rs 655 crore in the corresponding quarter last fiscal. The total revenue from operations during the quarter was Rs 4,779 crore, marking a 4 percent growth.
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