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Nestle aims to nearly double sales via e-commerce by 2025

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·2-min read
FILE PHOTO: Logo of Nestle is seen in Konolfingen
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By Siddharth Cavale

(Reuters) -Nescafe maker Nestle on Wednesday said it expects to nearly double its e-commerce sales to 25% of its group total by 2025 by stepping up marketing and technological investments.

Nestle will push sales of its products to consumers directly via its own online channels, or direct to consumer, Nestle CEO Mark Schneider said, building on the success of Nespresso coffee pods and Purina PetCare, which are increasingly being sold directly to consumers via Nespresso.com and Purina.co.uk.

"We plan to take (e-commerce) sales from about 13% in 2020 to 25% by 2025," Bernard Meunier, head of Nestle's strategic business units and marketing and sales, said at a virtual investor summit.

This will be achieved by increasing digital marketing investment to 70% by 2025 from 47% in 2020, Meunier added.

The KitKat chocolate maker did not provide details of the size of the investment, which will be funded through self financing and savings. So far, Nestle's e-commerce investments have not been dilutive to the business, the company said.

Nestle's total sales in 2020 were 84.34 billion Swiss francs ($90.71 billion). E-commerce sales represented 14.1% of the total in the first nine months of 2021, compared with 12.8% in the same period in 2020.

Meunier said e-commerce sales growth will be driven by markets such as the United States, Europe and China.

Big food manufacturers are seeking to sell more of their products to consumers directly partly to gather data on shopping habits. Also, Apple Inc and Alphabet's Google are taking steps to prevent advertisers from tracking user data without their consent, forcing companies to seek new avenues.

Nestle said its investment would generate 400 million first-party data points - information collected directly from consumers - that will feed into an analytics system to predict out-of-stocks and where sales can be boosted. The company currently collects about 205 million data points.

The digital marketing investments will also be used to add more employees and expand the company's in-house studios for advertising instead of relying on digital agencies.

"In a world where there is no rule book to follow, a lot of learning has been done already and we are looking forward to the next phase," Schneider said.

($1 = 0.9298 Swiss francs)

(Reporting by Siddharth Cavale in Bengaluru; Editing by Jan Harvey and Jane Merriman)

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