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What's biting Nestle's profits

Packages of Nestle Toll House chocolate chip cookies are displayed on a shelf at Cal Mart Grocery in San Francisco, Calif.

TEXT OF STORY

Bill Radke: The world's largest food and drink company reported a more than 2 percent drop in profit this morning for the first half of the year. This is the first decline for Nestle in six years. From London, Christopher Werth reports.


Christopher Werth: One area where the company was hardest hit is bottled water. That's where Nestle gets 10 percent of its sales. Apparently, people drink less Perrier in a recession. Sales were worst hit in Europe, but stronger in the Americas and Asia. But Andreas von Arx, food industry analyst at Hevleas in Zurich, says sales were still growing in other areas of the company.

Andreas von Arx: I wouldn't see it that negative. What you have is you have certain categories not doing as good, of course, as they did in the past. Relatively weaker categories at the moment are water and nutrition businesses.

Nestle's nutrition brands include Jenny Craig and Gerber baby foods. How soon those names performed better remains to be seen. But Nestle is also struggling with the strength of the Swiss franc to other currencies. While American companies like Kraft and Hershey are profiting from the weakness of the U.S. dollar.

In London, I'm Christopher Werth for Marketplace.

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