Nestlé and Diageo stymied by weaker Chinese demand

 
Diageo's Haig Club new scotch whisky was created in partnership with David Beckham (Photo: Carl Court/AFP/GettyImages)
Laura Chesters16 October 2014

Weak demand in China continued to be a thorn in the side of consumer goods giants Nestlé and Diageo today.

Swiss-based Kit Kat maker Nestlé, the world’s largest food and drinks maker, announced underlying organic growth had slowed to 4.5% in its third quarter compared with 4.7% in the first half.

Sales in the nine months to the end of September came in below analyst expectations at Swfr66.2 billion (£43.7 billion).

Spirits giant Diageo said a slowdown across emerging markets led to a 3.5% tumble in first-quarter volumes.

Nestlé reported sales growth in emerging markets, which represented 44% of group sales, slowed to 9.5% from 9.7% in the first half and said China was particularly challenging. However, it is still aiming for organic growth of around 5% for the year.

Smirnoff vodka-to-Johnnie Walker whisky maker Diageo suffered from a plethora of problems including a slowdown in China.

There was also a tax hike in Kenya, political instability in Russia and lacklustre performance in north America, which makes up 34% of its global sales, with sales up just 0.1%.

Asia Pacific saw revenues tumble 7.4% as a crackdown on ostentatious spending hit sales in China, although Diageo is pushing ahead with launches there, including its Haig Club new scotch whisky, created in partnership with David Beckham.

Diageo, which reported an overall sales decline of 1.5% in the quarter, has been focusing on its upmarket 'reserve' business which has seen strong growth and sales grew 10% in the quarter.

Chief executive Ivan Menezes said he expected “full year top line growth to improve on last year’s performance" at the group.

Issues in China also hit French cognac maker Rémy Cointreau which reported first half sales down 5.6%. Its Rémy Martin cognac brand reported a sales decline of 13.4% as it continued to suffer from weak demand and destocking in China.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in