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Nestle cuts sales outlook as growth disappoints

Thursday, October 20, 2016 - 01:22

Nestle has become the latest company to be hit by the global slowdown affecting food manufacturers after posting its weakest underlying sales growth in more than a decade. As Hayley Platt reports, the Swiss food giant has cut its outlook for the year.

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Nestle makes some of the world's most popular chocolate bars. But the global slowdown affecting food manufacturers is now hurting the Swiss giant too. It's posted its weakest underlying sales growth in more than a decade. (up 3.3 percent - first nine months sales ) And it's cut its full-year sales outlook (3.5% from 4.2%) (SOUNDBITE) (English) FXPRO, HEAD OF RESEARCH, SIMON SMITH, SAYING: "For Nestle who are quite international in their reach reach it's pricing power. They said on their call there's no end in sight to deflation so actually that's one of the real problems they face and the consumer environment is still very lack lustre, another issue noted on the call." Price deflation has been a particular problem in Europe. Along with fierce competition among supermarkets. It's also finding conditions tough in other key markets like China and Brazil. It's not alone - rival Unilever has increased prices to compensate for currency weakness. That caused a row last week with retailer Tesco - it was nick-named Marmite-gate after one of Unilever's products. (SOUNDBITE) (English) FXPRO, HEAD OF RESEARCH, SIMON SMITH, SAYING: "For me it's just a storm in a tea cup or a storm in a Marmite jar. There are always these debates and battles that go on between large supermarkets and suppliers especially when it comes to pushing through price increases." Nestle now plans to focus on increasing volumes. And it expects to see prices improving. ///

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