Former Nestlé S.A. chairman Peter Brabeck-Letmathe was once the subject of large-scale online slander for his supposed views of water as a fundamental human right.
Tweeters and commentators, rarely ones to indulge in nuance, pounced on a 2005 comment (made in German) from Brabeck seemingly questioning whether water is a public right.
His comments were taken out of context, but such was the proliferation of conspiracies and vitriol that Nestlé was forced into assuring the world that Brabeck-Letmathe does, in fact, “passionately” believe that water is a human right.
Conspiracies aside, Nestlé is no stranger to very real water controversies, particularly in regards to how the multinational conglomerate extracts the vital mineral from native land.
One field where Nestlé does find itself in uncharted waters however, is its worryingly sluggish organic sales growth (OSG) and earnings guidance.
In yesterday’s half-year trading update, the owner of Nescafé, KitKat, Maggi, Haagen-Dazs and hundreds of other household names said it expects ORS of around 3% for the full year.
That’s a 25% reduction from the 4% forecast issued in April, even though Nestlé’s ‘real internal growth’ (RIG, which is one of the company’s preferred adjusted sales metrics that takes into account weighings by the relative value per unit sold) showed significant quarter-on-quarter improvement.
For Barclays analysts, these results represented “one step forward, two steps back”.
Commenting on the results, analysts said: “The market wants more than RIG momentum to continue, they need to see ‘one-off’ impacts disappear, a US consumer improving and evidence that the growth engines Nestlé have historically reliably leaned on before (coffee, pet, nutrition, NHS) can support the FY25 guidance to align with the medium-term guidance of (mid-single digit) OSG.”
“CEO Mark Schneider reiterated his stance that in a normalised state, without M&A, Nestlé is capable of delivering (mid-single digit) OSG, which they say they will present in greater detail at their Capital Markets Day in November later this year,” the bank added.
It all amounts to “uncharted waters” for Nestlé, said Barclays. But at least the bank hasn’t accused Nestlé of privatising our global water supply.