This audio is generated automatically. Please let me know if you have any comments.
Diving overview:
- Nestle said Thursday it would lay off 16,000 employees. Over the next two years, as the packaged food giant accelerates its business transformation by cutting costs. The reduction represents approximately 6% of the company. The global workforce is 277,000.
- The Nespresso and Hot Pocket maker also increased its cost-cutting targets, aiming to cut costs by 3 billion Swiss francs, or $3.8 billion, by the end of 2027, up from the company’s previous target of $3.14 billion.
- Nestle’s move signals that newly appointed CEO Philipp Navratil plans to continue the efforts started by his predecessor to rescale the food and beverage company. management confusion Challenges for business in recent years.
Dive Insights:
While Nestle is working to improve its operations, the company’s chief executive said in a statement that the world’s largest food manufacturer “must change faster.”
Navratil said in a call with investors: admitted “Nestlé has not been the most efficient company in the past.” As part of its transformation, the food giant plans to prioritize automation to enable faster decision-making.
“What we announced today about headcount is really about becoming an agile company, a company that makes decisions quickly, a company that drives impact, and a company that leverages scale,” Navratil said.
Job cuts include: The company employs 12,000 people across a variety of functions and geographies. Another 4,000 jobs will come from job cuts in manufacturing and supply chain.
Navratil added that Nestle plans to “ruthlessly evaluate our talent,” measuring both leaders and employees against certain key performance indicators.
“Part of a performance culture is making sure that people who perform are kept with the company and people who aren’t are not,” he said.
Navratil, who joined Nestlé in 2001, took over as CEO last September, following his predecessor. Laurent Freixe was fired. Following an undisclosed romantic relationship with a direct subordinate. He becomes the company’s third CEO in less than a year.
Before leaving, Freixe prioritized increasing advertising and marketing to boost sales and increase share of some of the biggest brands. The CPG giants also made smaller and larger bets that had the best chance of success.
In a call with investors, Navratil doubled down on the turnaround plan launched by his predecessor, emphasizing the need to increase marketing and investments to grow individual businesses.
“Accepting the fact that we have lost market share is no longer an option,” Navratil said. “This mindset needs to change.”
The Switzerland-based company is also deciding whether to sell some of its vitamin brands and the future of its water business. Navratil said it was reviewing all parts of the food giant’s portfolio with an “open mind” to see whether certain businesses should be revived or sold.
This decision to cut jobs came as Nestlé showed growth that rose from 2.9% in the first half to 4.3% in the third quarter. In North America, one of our largest markets, organic growth was 0.4%.
Nestlé is not only aiming to improve its own business, but is also dealing with a decline in consumer spending due to inflation and global uncertainty. At the same time, some of Nestle’s brands are being affected by rising coffee and cocoa prices due to U.S. President Donald Trump’s tariffs.
The company’s size also makes it more difficult to quickly adapt to changing consumer preferences. This is especially true as more shoppers turn away from processed foods.
“Our scale and breadth brings benefits… but it also brings complexity, which creates inefficiencies,” Navratil said. “It’s clear that working with simpler structures and roles allows us to work more agilely.”
Sarah Zimmerman contributed to this story.
