Nestle's premium baby formula saw strong demand in China despite falling birth rates: CFO

[September 25, 2019]   (Reuters) - Nestle's <NESN.S> infant nutrition business in China grew at a healthy pace, despite a steep fall in birth rates and an overall slowdown in consumption, the company's chief financial officer said at a conference on Wednesday.

Nestle Chief Financial Officer Francois-Xavier Roger poses before a news conference at the company headquarters in Vevey, Switzerland, February 15, 2018. REUTERS/Denis Balibouse

CFO Francois-Xavier Roger said China's birth rate had dropped 16% last year, but the company still managed to grow its infant formula business in the country by about 4% to 5% in the first half of the year, due to strong demand for its premium offerings, Illuma and S-26 gold.

Chinese mothers have shown a growing preference for pricier imported infant formula products following a domestic tainted-milk scandal in 2008, when several infants died after the industrial chemical melamine was added to milk powder to raise protein levels.

However, Roger said while demand for premium products in the country was strong in the first half, there was a slowdown in consumption of mainstream offerings, which led to sales growth of about 2.5% to 3% overall, or about half the pace it had achieved in the same period a year earlier.

At the Bernstein conference in London, Roger also said the company continued to focus on restructuring its portfolio through acquisitions and divestments to meet its 2020 growth targets, which calls for sales growth in the mid-single-digit percentage range.

(Reporting by Siddharth Cavale in Bengaluru)

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