Nestlé Tries to Hitch a Ride with Formula 1

KitKats are great, but it’s hard to see them being handed out to F1 drivers on the winners’ podium.

Nestlé and Formula 1 announced on Monday that starting with the upcoming 2025 season KitKat will be the sport’s “official chocolate bar.” It’s a sign that the world’s largest food company, which has suffered a sugar-crash of a year, is throwing its weight into marketing to improve its fortunes. It’s also a testament to the soaring appeal of Formula 1. 

Vroom

Nestlé’s 2024 has been battered by spiking manufacturing costs, a changing of the guard at the CEO level, and faltering growth. Its stock has sunk 20% so far this year, and the shadow of weight-loss drugs and their prophesied impact on consumers’ snackishness still hangs over the company’s share price. New CEO Laurent Freixe cut Nestlé’s full-year sales growth forecast to 2% last month. In February it was predicting 4% growth, and the reduction is an unprecedentedly big downturn for the company, Vontobel analyst Jean-Philippe Bertschy told the Financial Times. “The priority for the new management team now is to bring Nestlé back to its roots and to what it does best: marketing and connecting with consumers,” Bertschy added.

Meanwhile, Nestlé’s new partner is still lapping the world:

• In Q1 of this year F1 reported 45% revenue growth year-over-year, followed by 20% in Q2. In the most recent quarter results were less stellar; it reported a 3% revenue drop largely due to fewer races compared with the same time last year.
• F1 is experiencing a broadening of its audience, which is probably very appealing to Nestlé. Its fan base is growing, getting younger, and more female thanks to a new clutch of F1 influencers on social media, CNBC reported earlier this year. 

Season’s Shrinkings: While Nestlé is hoping to woo consumers with its shiny new F1 partnership, it faces a backlash in the UK over alleged shrinkflation. British consumers spotted last week that some of the miniature chocolates in Nestlé’s Quality Street chocolate box (long considered a Christmas-time staple) have shrunk in size. Nestlé insists that the net weight of the box remains the same, but that wasn’t enough to head off the ire of British chocoholics.