Nestlé, the multinational food and beverage conglomerate, has made a strategic decision to increase its marketing and advertising spend by 0.8% across 2023. This move comes despite a 1.5% drop in year-on-year sales to 83 billion and a 0.3% fall in real internal growth.
The owner of popular brands such as Nescafé, KitKat, and Nespresso, Nestlé allocated a significant 7.7% of its total sales revenue to marketing and advertising expenses throughout the financial year. This decision was made even though global grocery inflation significantly undercut the firm’s ability to price competitively in 2023.
However, Nestlé’s strategic investment in marketing appears to have paid off, as the company still registered 7.2% global organic growth, with this figure rising to 8.2% for its home European market.
“In this challenging context, we delivered strong organic growth and solid margin improvement with increased marketing and other growth investments,” said Nestlé CEO, Mark Schneider.
A Focus on Growth and Innovation
As Nestlé looks to the future, the company is prioritizing volume- and mix-led growth with increased brand support. Schneider outlined the company’s strategy, stating, “We are enhancing value for consumers through active innovation and renovation, premiumization, affordability, and more nutritious options.”
To drive market share gains, Nestlé is focusing on delighting consumers through differentiated offerings and superior execution. The company is confident in its strategy, portfolio, and capabilities to deliver on its 2025 targets.
In 2024, Nestlé expects to see solid organic sales growth of around 4%, alongside a moderate increase in its underlying trading operating profit margin. This forecast is based on the company’s strategic investments in marketing and its commitment to innovation and product differentiation.
How to ensure marketing spend hits the mark
With budgets tightening amidst economic uncertainty, it is more important than ever for B2B companies to ensure their marketing spend is allocated effectively. Below are some key considerations when looking to optimize return on marketing investment:
Firstly, take a data-driven approach and closely analyze where marketing dollars are currently going and the tangible impact this is having on metrics like lead generation, opportunities created, and revenue growth. Identify the highest performing channels and campaigns to double down on.
Additionally, align marketing goals and spending to wider commercial objectives around entering new markets, launching new products/services, or driving penetration with existing customers. This strategic alignment ensures relevance and impact.
Looking ahead, consider increased investment in owned channels like content, SEO, and events where engagement can be cost-effectively driven over a sustained period. Equally, look to rationalize expenditure on paid media and advertising if efficiencies can be found.
Finally, focusing on sales and marketing alignment and closed-loop reporting provides clarity on marketing’s contribution to pipeline and revenue. This quantifiable evidence helps build the case for sustained or increased budget.
Taking this targeted, data-led approach will help B2B marketers optimize their budgets to drive commercial performance, even in challenging economic times.
