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Sales of the company's instant "espresso" coffee brand Nespresso exceeded 1.0 billion Swiss francs for the first time in 2006, it added.
The Swiss-based company reported record full-year profit of 9.2 billion Swiss francs, above analysts' expectations and boosted by takeovers and product innovations.
Nestle also said it was confident of achieving organic growth of 5.0-6.0% and a further improvement in pre-tax earnings this year.
The price of shares in the group was showing a gain of 2.6% to 476.25 Swiss francs in midday trading.
"2006 was another record year for Nestle. We are seeing the benefits of the group's transformation into a nutrition, health and wellness company, with stronger innovation and branding, as well as improved efficiency," said company chairman Peter Brabeck-Letmathe in a statement.
Sales rose by 8.1% to 98.5 billion Swiss francs, while pre-tax profit rose by 13.8% at 13.3 billion Swiss francs.
The food and beverages division was the main growth driver, contributing 6.7 billion Swiss francs towards the total 7.3 billion Swiss francs increase in group sales.
The Nutrition division achieved organic growth of 6.1% in 2006 with sales of 6 billion Swiss francs.
It performed well in Latin America and much of Asia and Africa, but its overall performance was held back by China, the company said.
The division saw strong gains in the infant nutrition market owing to the international roll-out of a new infant formula product, Nestle NAN HA.
This new product launch comes despite a 30-year boycott of the company by some consumers in protest at its marketing strategies for breast milk substitutes in developing countries.
The company said it would propose a 15.6% increase in its dividend payment to shareholders, to 10.40 Swiss francs per share from 9.0 Swiss francs.
Nestle also said it would announce the name of its new CEO this September. Brabeck-Lemathe will step down from the post after the company's AGM in April 2008, though he will remain board chairperson.
