Posh Coffee Drinking at Home Marks ‘Good’ Year for Nestle Brazil

This content was published on September 12, 2020 - 11:00

(Bloomberg) -- Nestle SA is producing at full tilt in Brazil as it responds to a lift in coffee demand from house-bound drinkers and builds inventories to guard against supply disruptions.

Production of all items in the South American nation, from ice-cream to pet food, is probably up about 15% from 2019 levels in what should be a “good” year for the Swiss company despite the pandemic, Marcelo Melchior, who heads Brazilian operations, said in an interview.

Initially, lockdowns upended sales to restaurants, hotels and malls, while boosting demand for items more typically consumed at home. Nestle then began to hire people and relocate employees to run at full capacity in all operations. Brazil’s top seller of instant and pod coffee through its Nespresso and Dolce Gusto brands is seeing a jump in purchases of high-end products for consumption at home.

“People have brought home the pleasure they used to get in having coffee in a nice cafeteria or restaurant,” Melchior said. That behaviour has also extended to cooking ingredients as people try to make lockdowns more pleasurable.

READ: Nestle Outshines Rivals With Revenue Growth Led by Coffee

In the out-of-home segment, a recovery in sales has been slow amid lingering caution by consumers, although a doubling of online sales has helped cushion the blow. Still, Melchior doesn’t see a permanent change in behaviour.

“Out-of-home consumption has survived many issues, including wars, and it has always resumed,” he said. “How the return will be this time? We don’t know. Human beings, though, are social.”

©2020 Bloomberg L.P.

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