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Diving overview:
- Nestle is planning changes to its organizational structure and board as the maker of Hot Pockets and Tombstone struggles with slowing sales growth. Among other changes, the food and beverage manufacturer plans to reduce the size of its board of directors, consolidate its Latin American and North American operations and consolidate its Greater China division with its Asia, Oceania and Africa regions.
- Laurent Freixe took office. Last September, Nestle CEO said: “A leaner board structure and closer collaboration between our headquarters leadership team will increase simplicity, speed decision-making and strengthen the momentum of our global initiatives.”
- The changes are based in Switzerland. nestle It lowered its overall sales target for this year to 2% from a previous forecast of at least 3% and warned of weak consumer demand. Bloomberg noted that 2% growth would be the lowest annual growth rate since at least this century. nestle The company previously lowered its organic sales growth target in July.
Dive Insights:
Food and beverage companies have felt the impact as cash-strapped consumers cut back on spending, but have suffered particularly hard. nestle.
In an interview with the Wall Street Journal, Freixe said Nestlé will offer more discounts and price cuts to attract shoppers for its products, including Lean Cuisine, Nespresso and Blue Bottle coffee. He said consumers around the world are aware of high prices, but this is especially evident in the United States.
“Consumer demand has weakened in recent months and we expect the demand environment to remain weak,” Freixe said in a statement.
In North America, which accounts for more than a quarter of Nestlé sales, organic growth decline 0.3% in 9 months 18.5 billion Swiss francs ($21.4 billion). The packaged food company said competition was “serious,” especially in the frozen food sector. nestle The region recorded market share gains in pet food and coffee, and losses in frozen pizza and coffee creamer.
In the third quarter, Nestlé reported negative pricing in North America as the promotional environment returned to pre-COVID-19 levels as companies looked for ways to attract and retain shoppers.
New CEO’s decision to completely reorganize Nestle’s structure shows he is wasting little time transforming the global food company. Improving decision-making and streamlining your business makes it easier for your company to respond quickly to problems..
Main selling points of choice Freixe was a company insider who knew the portfolio and what changes needed to be made. Still, he will focus his energies on fixing the food giant as consumers buy less, competitors cut prices and other global challenges strain its business.
After withdrawing innovation, Nestlé has increased spending on its core portfolio and launched new products targeting consumer trends, including a line of foods for consumers who use GLP-1 drugs. Nestlé, which has sold off its water, ice cream and confectionery businesses in the U.S. in recent years, is reviewing its portfolio. Freixe told analysts. This increases the likelihood that growth will slow or additional sales of non-core businesses will occur.
