Nestlé is slashing its sales outlook, in part because of value-seeking North American consumers.

The world’s largest food maker, and the company behind the Nespresso, Aero and Purina brands, now anticipates sales to grow about 3%, less than the approximately 4% it had previously targeted.

The CPG reported a net profit of 5.64 billion Swiss francs (C$8.87 million) for the first half of 2024, approximately the same as last year. Revenue rose 2.1% in the first half, compared with analyst expectations of 2.5%.

Advertising and marketing expenses were 8.1% of sales, an increase of 100 basis points compared to the first half of 2023. For North America, the company reported that advertising and marketing investments increased to support future growth.

The company says globally it “substantially increased marketing investment for billionaire brands versus the first half of 2023.” It is looking to bring “focus” to areas where it can make the biggest impact.

In Canada, January to June sales year over year were down more than 5%. During Thursday’s Q&A, company CEO Mark Schneider said there is “significant value seeking,” particularly among lower-income demographics in North America.

However, there were some positives. For example, sales of confectionery grew at a mid single-digit rate, led by KitKat in Canada. Globally, Nestlé’s coffee business was boosted by the rising price of the commodity, as the company reports seeing 6% organic growth for Nescafe and strong growth potential for its coffee segment.

PetCare delivered mid single-digit growth, driven by the likes of Fancy Feast, while the company’s water delivered mid single-digit growth, underpinned by momentum for S.Pellegrino and a rebound for Perrier.

E-commerce sales grew by 10.6%, reaching 18.2% of total group sales. Schneider noted that its ecomm business is “generating strong momentum and gaining share.”

Schneider added that the CPG says is managing price in a “tough consumer environment.” He also said product launch intensity is up 15% for the first half of this year, “restoring” intensity it had seen prior to 2022.