>> Nestlé says sales growths and profits are down. The Swiss food giant makes everything from KitKat bars to Nestcafe coffee. It saw sales rises just 3.5% in the first half below full costs. Profits falling to just over 4 billion Swiss Francs. Reuter's consumer goods correspondent Martine Geller says the company faces challenges on every front.
>> Nestlé overall faces a lot of pressures like all consumer goods makers from slowing economies around the world and even more demanding consumers. And aside from that there are new competitors getting stronger, in particular JAB Holdings has done nine coffee acquisitions in the last four years and now has become a huge competitor.
>> Coffee now the key battleground for the company. Nescafe is the global market leader for instant while Nespresso created the market for coffee capsules. And Nestlé hopes innovation will help it catch up in the US market where it lags local rivals.>> It's been trying to increase its presence there through this Vertuoline machine.
Which makes so whereas an espresso, makes espresso drinks that are small, Americans tend to drink longer cups. Vertuoline does bigger cups of coffee for American drinkers that so far is going very well. And Nestlé is increasing its presence in the US. So, so far it's going well but it's still off a very small base.
Nestlé far from alone in battling headwinds. Rival Kraft Heinz reporting a drop in sales earlier this month. Like the Swiss firm, it's grappling with governments and consumers who want to cut salt, sugar, and fat consumption. That's forcing food firms to reformulate many of their products. Nestlé is betting that pricey coffee could be the way forward.