The food and beverage giant released half-year earnings Thursday (July 23) showing a slight dip in sales, with coffee remaining a strong driver of organic growth.
The company had to hike prices on some coffee products this year as bean prices climbed, but CEO Philipp Navratil told analysts during an earnings call that consumers don’t stay away long.
“You see, obviously, normally in the first quarter after a price increase in coffee, you see consumers adjust, but then as coffee is a habit that is really much common, and people will go back to their normal usage normally after a quarter,” he said. “That is the dynamic in terms of the pricing. In terms of Nespresso, we do the same.”
He added that the company is focused on sales of its Nespresso machines, and how many households purchase one of these coffee makers and then have access to their pods. These households tend to have “a little bit weaker purchasing power” than the households Nestlé had courted in the past.
“That is exactly the opportunity we have with Nespresso, to get them into the system and then making sure they have access to the coffees they love through our boutiques, through our online store, through retail partners like Walmart or Amazon and Target, where pods are available online as well,” Navratil said.
This is happening at a moment when American consumers in tighter financial circumstances are feeling less confident, as recent PYMNTS Intelligence research has shown.
Households that are not living paycheck to paycheck remained more or less stable in terms of consumer confidence, as did those people who live paycheck to paycheck but are able to stay on top of their bills.
The deterioration could be seen among households who struggle to cover their bills, composite score dropped to 40.6, lengthening the distance between the strongest and weakest financial groups to roughly 21 points.
“The distinction helps explain why spending has remained resilient even while traditional confidence measures have weakened,” PYMNTS wrote last week.
“Consumers may express concern about the broader economy, yet those with stable employment and manageable household finances continue to make purchases. Households under greater financial pressure have responded differently, narrowing spending to essential categories while delaying purchases that can wait.”
