Abbott Nutrition and Nestle both report revenue increases in Q3 of 2021 11-08-2021

Abbott Nutrition recently released its third-quarter financial report, in which it reported sales of US$10.93 billion during the third quarter, higher than market expectations of US$9.56 billion and a year-on-year increase of 23.4%. Additionally, net profit in the third quarter was US$2.1 billion, a year-on-year increase of 70.4%.


At the same time, Nestle also released its third-quarter financial report yesterday, which showed that Nestle's third-quarter sales were SFr 63.3 billion (USD 69 million), an increase of 2.2% year-on-year, but its infant nutrition business showed negative growth. On the other hand, infant nutrition growth outside of China is positive.

 

Abbott Nutrition business sales increase by 9.6% YoY 

According to Abbott’s third quarter financial report, Abbott Nutrition's business sales were US$2.1 billion, an increase of 9.6% year-on-year. Specially, Abbott’s infant oral electrolyte and oral rehydration salt brand Pedialyte showed strong performance in the third quarter of this year. Benefiting from the continued growth of the infant nutrition business, Abbott’s US-related business grew by 20.2%, and global infant nutrition sales increased by 9.4%. In addition, Abbott’s nutritional product brand Glucerna has achieved good results, driving Abbott’s global adult nutrition market to achieve a sales growth of 9.8%.

 

The 2021 International Food Safety and Health Conference was held at the beginning of this month. Carreno, the Vice President of Abbott Nutrition Business North Asia, attended and participated in the discussion and announced that it will gather three academics and several experts in the fields of nutrition, food processing, and safety in order to form an academic committee and set up the Abbott Breast Milk Research Institute, which will bring breakthrough advanced scientific formulas to better meet the nutritional needs of babies' growth.


Nestlebaby nutrition sales decline in Q3 of 2021

According to Nestle’s third-quarter 2021 financial report, Nestle achieved low-single-digit growth in the Chinese market during the first nine months of 2021. The strong sales growth in most categories was offset by the decline in sales revenue from the infant nutrition business. In addition, Nestle commented that in the difficult economic environment of the regional lockdown, Asia, Africa, and Asia have been unable to exceed a mid-single-digit organic growth. The slight decline in growth in the third quarter reflects the decline in sales of China's infant nutrition.


Previously, Nestle’s Chief Financial Officer Franois-Xavier Roger said that China’s infant nutrition products have encountered different challenges, including the impact of declining traffic in maternal and infant stores on sales. Earlier this year, Nestle CEO Mark Schneider also revealed that Nestle is responding to the unstable birth rate in China and increased competition from local brands by increasing its penetration rate in the sinking market and launching new research and development products.


Song Liang, head of the economic expert group of the China National Farming Dairy Alliance and senior dairy analyst, once predicted that China’s dairy industry will encounter fierce competition with other enterprises for the following three reasons.


First, the decline in the birth rate around the world has caused the total market capacity to shrink rapidly. Second, current policies have caused market concentration to increase rapidly, and the formation of zero-sum games among leading companies has been accelerated. Third, traditional production companies and distributors still rely on milk powder as their main source of income and profit. This is also causing today's price wars between major companies.


Song Liang also believes that the milk powder market will start to recover after 2023. With the end of the pandemic and the successive introduction of various supportive policies, the population's fertility rate will rise significantly, international political and economic relations will improve, China's milk powder formula registration system will no longer be in effect, which will lead to an upward trend in China's milk powder market.

 

For more information, please check our Dairy Products China News.



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