Nestle SA Reg Shs. Ser. B Spons (ADR)(OTCMKTS:NSRGY) reported that it will enter into new agreements to enhances sales of its Cailler premium chocolate worldwide. This marks the company entry into the international super-premium chocolate division. The market was buzzing with the speculations that Nestle, famous for its mass-market chocolates such as Butterfinger and Kit Kat, intends to get a bigger market pie in the rapidly-growing premium sector, especially in the United States.
The update
Nestle plans to sell Cailler chocolates through online retailer firm Amazon in the China, United States, Britain and Germany, and through travel retail stores at airports in Singapore, Geneva, Zurich and Dubai. As of now, its Cailler chocolates are chiefly sold in Switzerland market. Sandra Martinez, the Head of Nestle’s international confectionery business, stated that they believe the brand has considerable global potential. The brand dates back to year 1819 and was established in Vevey. Also, it boasts all the characteristics of a super-premium good, a high quality item with a unique image and brand story.
The buzz
In unrelated news, Nestle said that the company finds Russia as one of the most potential markets to expand its coffee business despite lower consumer spending caused by ruble’s devaluation and falling oil prices. Russians are increasingly choosing single-serve varieties, a change also noticed in eastern European nations such as Turkey. Nestle runs eight “Nespresso” in Russia.
Change in focus
Nestle’s Russian sales is expected to jump nearly 15% this year in local currencies. It is essential for the company to achieve that growth as the growth in other emerging markets including China and India have slowed. Also, Russia scores eighth position in terms of coffee market globally. Single-serve coffee is turning to be the rapidly-growing market in Russia, having grown over 20% percent a year over the last six years.
Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY) opened with a very sharp gap up yesterday and managed to protect the gains to end the trading session with a solid gain of 2.96%. The volume of 563,000 was not noteworthy but still an increase over the daily average of 510,000. Normally this kind of price action would be encouraging for the bulls but at the present moment this may turn out to be insignificant. From the broader perspective, the price is moving in the congestion zone of $72-$77 and only a break in either direction may produce a significant trending move.
