Industry-topping growth gives Nestlé rivals food for thought

The company – which makes Kit Kat chocolate bars, Nescaf coffee and Hagen Dazs ice cream – posted a 4.1 per cent rise in underlying sales and grew "substantially faster" than its industry, according to chief executive Paul Bulcke.

Nestl – linked at one stage with a possible bid for rival Cadbury – expects its food and drinks business to improve on the performance this year.

The world's biggest packaged food group posted revenues of 108 billion Swiss francs (64.5bn) with sales of its Kit Kat chocolate bar up 7.1 per cent worldwide.

In the UK, sales of Kit Kats – which are now made with Fairtrade Foundation-approved chocolate – were 5.3 per cent ahead and sales for the overall Rowntree's brand were up 10 per cent, helped by new products such as Randoms fruit jelly sweets.

Cadbury was eventually bought by US food giant Kraft, from which Nestl announced last month that it was buying a frozen pizza business.

Nescaf is also improving its market share after the company launched its biggest investment in the brand for more than 20 years with its "coffee at its brightest" campaign last September. But the company warned that the outlook for the market "remains tough" this year in a still-difficult economic climate.

The firm – which also owns Perrier water – said: "UK consumers are more price-conscious than ever and the retail market continues to be intensely competitive."

Across European markets, which the firm branded as "one of the world's most challenging business environments", organic growth edged just 0.3 per cent higher. The UK, France and Switzerland were among the best performers.

Nestl, however, enjoyed a "remarkable" 6.5 per cent organic growth in North America. Asian and African markets advanced 6.7 per cent as the company saw good performances from fast-growing countries such as China.

While the 4.1 per cent rise in underlying sales was in line with analysts expectations, the figure did fall short of the company's 5-6 per cent target.

Chief financial officer Jim Singh said: "In some years we do very well, and other years we fall slightly below."

Full-year pre-tax profit stood at SFr10.4bn, significantly below the SFr18bn it earned the previous year, when it benefited from the sale of part of its stake in eye care company Alcon.

Nestl said its Nespresso coffee machine capsules business had fared particularly well.

The company plans to increase promotion of the capsules outside Europe, where the bulk of sales occurred last year – and where an adverting campaign featuring Hollywood actor George Clooney have become omnipresent on television and in glossy magazines.