Whatâs Going On Here?NestlĂ© announced better-than-expected first-quarter sales on Thursday, as the worldâs gradual economic recovery finally gave the Swiss giant the break itâs been craving. What Does This Mean?Get yourself a consumer goods company that can do both: the household snacks that stuck-at-home folks needed to endure their fifteenth lockdown in a row, and the supplies that Asian bars, restaurants, and shops needed to fling their doors open once again. That one-two punch drove NestlĂ©âs underlying sales â i.e. disregarding currency swings and new mergers and acquisitions â almost 8% higher than the same time last year. That was more than twice the growth analysts were expecting, and investors were cool with it: they sent NestlĂ©âs stock 3% higher. Why Should I Care?For markets: Extravagance is the new in-travagance.
NestlĂ©âs uptick in sales is just one of several signs that a consumer spending boom is in full swing. Hereâs another one: professional investors have been noticing a trend toward more upscale products as shoppers spend the cash theyâve been saving over the last year, particularly among things like cosmetics, spirits, and clothing. Case in point: luxury brand HermĂšs and spirits firm Pernod Ricard reported an uplift in sales on Thursday.
The bigger picture: Chinese customers are spending big.
Strong results arenât the only thing NestlĂ©, HermĂšs, and Pernod Ricard have in common: all three seriously benefited from robust consumer spending in China (tweet this). Thatâll happen when Chinese consumers are given the freedom to shop as they please â a luxury that still isnât being afforded to many Europeans and Americans. Companies that arenât big in China, then, might be feeling a pang of regret. Or regrette, in Renaultâs case: the French carmaker reported worse-than-expected earnings on Thursday, even as other carmakers like BMW and Daimler â both of which have big businesses in China â beat expectations. | 