A change of course for Nestlé
In recent months, Nestlé has embarked on a significant restructuring process, led by the new CEO Laurent Freixe. With an operating margin target set at 17%, lower than its predecessor’s forecasts, Freixe is trying to revitalize sales after a period of stagnation. This decision marks an important strategic change for the company, which aims to respond to the challenges of the current market.
Ambitious growth objectives
Despite the difficulties, Nestlé expects revenue to increase by 4% or more in the medium term, exceeding the most conservative forecasts of the past. However, analysts, such as James Edwardes Jones of RBC, warn that this objective may be too optimistic, suggesting that a more cautious view would be preferable. Organic sales growth has been lowered to 2% for this year, the lowest rate since 2000, highlighting the challenges facing the company
.
Strategies for reducing costs and investments
To address these challenges, Nestlé has announced a plan to reduce costs of 2.5 billion Swiss francs by 2027. These savings will be reinvested in advertising and marketing, with the goal of restoring investor confidence and stimulating demand. Freixe, with 38 years of experience at Nestlé, has already initiated significant internal changes, including the creation of a leaner and younger executive board, to accelerate decision-making
.
Restructuring of the product portfolio
Another important step in Freixe’s strategy is the separation of water brands, such as Maison Perrier and Acqua Panna, into a stand-alone business. This change aims to improve the management of a sector that has faced recent contamination issues and supply restrictions. In addition, Freixe is reviewing its product portfolio, considering potential divestments, especially in the frozen food sector, which has experienced a drop in sales due to economic pressure
on low-income consumers.
The challenges of today’s market
The current economic environment presents significant challenges for Nestlé, with consumers tending to opt for cheaper products due to inflation. Under Schneider’s leadership, the company had relied on increased prices to stimulate sales, but this approach led to a loss of customers. Freixe is aware of these dynamics and is trying to adapt business strategies to win back consumers and improve the
company’s overall performance.