This article first appeared in The Edge Malaysia Weekly on March 3, 2025 - March 9, 2025

Going by their latest financial results, Nestlé (Malaysia) Bhd (KL:NESTLÉ) and Berjaya Food Bhd (KL:BJFOOD) are facing an uphill task regaining the consumers they have lost in recent years to newer competitors.

Nestlé, which sells food and beverage products such as Milo, Maggi and Nescafe, saw a 37% decline in net profit last year to RM415.62 million — its lowest in 14 years. Its revenue fell 11.7% to RM6.22 billion and it declared the lowest annual dividend per share (RM1.79) since 2009. In 2023, its DPS was RM2.68.

As for Berjaya Food (BFood), the Starbucks coffee chain operator posted a net loss of RM35.33 million for the second quarter ended Dec 31, 2024. That was its fifth consecutive loss-making quarter, albeit an improvement from its net loss of RM42.58 million in the same period a year earlier. Its revenue fell by a third to RM123.1 million and it did not declare a dividend.

Apart from having had to deal with challenges such as rising cost pressures, the two companies have suffered from a prolonged boycott sentiment since the Israel-Palestine war erupted.

In a bourse filing, BFood said its performance was mainly due to the “prolonged impact of the ongoing sentiment related to the Middle East conflict”. Nestlé said its lower domestic sales in the final quarter was due to “consumer hesitancy and consumer confidence”.

Their results show that once market share is lost, it is tough to regain, even as new players swoop in. It is hard to miss the proliferation of new coffee chains in the country, for example.

Analysts expect that the boycott sentiment and cost pressures will continue to weigh on the two companies. Will they be able to innovate and stand the test of time?

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