Nestle has reported a decline in sales growth for 2024, with the Swiss food giant attributing the slump to consumer boycotts over its ties to Israel. According to MarketWatch report, the company, which owns global brands like Nescafe and KitKat, has become a key target for the boycott, divestment, and sanctions (BDS) movement due to its ownership of Israeli food company Osem.
In a trading update on Thursday, Nestle revealed that the slowdown in its real internal growth (RIG) metric — which tracks sales volumes — was linked to “consumer hesitancy towards global brands, linked to geopolitical tension.” The company’s RIG rate dropped from 2.2% in the second quarter to 1.3% in the third quarter, surprising analysts who had expected an increase, according to Deutsche Bank.
Nestle’s sales volumes were particularly affected in North America, its largest market, where its RIG declined by 0.9% for the first nine months of 2024, leading to a 2.6% drop in reported sales in the region.
The boycotts have targeted Nestle’s ownership of Osem, one of Israel’s largest food sellers. Nestle took full control of Osem in 2016 in a deal worth 3.3 billion shekels ($876 million). This is not the first time Nestle has faced consumer backlash; the company was at the center of a major boycott in the 1970s over its marketing of baby formula in developing countries.
In the first nine months of 2024, Nestle reported a 2.5% year-on-year decline in total sales, falling to 67.1 billion Swiss francs ($77.6 billion). Despite raising prices by 1.6%, the company has struggled to maintain growth. It now expects full-year operating profit margins to be 17%, down from the 17.3% margin it achieved in 2023.
Nestle’s new CEO, Laurent Freixe, outlined plans to streamline the company’s executive board in an effort to “increase simplicity” and “speed up decision-making.”
Shares of Nestle, listed in Zurich, rose by 2% on Thursday, although the stock has lost 12% of its value year-to-date.
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