Nestle shakes up leadership as sales slump

Nestlé’s new CEO, Laurent Freixe, has set lower sales growth expectations for 2024 and announced a leadership réorganisation. One analyst described this as a “painful reset” for the global food giant.

Freixe took over from Mark Schneider on September 1st in an unexpected leadership change at the Swiss company. Nestlé owns a wide range of brands, including Milo, Nescafe, Nespresso coffee capsules, Purina dog food, and Haagen-Dazs ice cream.

The Frenchman, who previously led Nestlé’s Latin America unit, was brought in to turn the company around following declining sales and several product scandals.

On Thursday, Nestlé reported sales of 67.1 billion Swiss francs ($77.4 billion) for the first nine months of 2023, a 2.4% decrease from the same period last year.

Freixe acknowledged the challenging market conditions via a statement, saying, “Consumer demand has weakened in recent months, and we expect the demand environment to remain soft.” He revised the company’s organic sales growth forecast to 2% for this year, down from the 3% projection made in July.

This reduction follows a trend of consumers shifting towards cheaper alternatives after years of high inflation. Previously, Nestlé and its competitors had seen high sales growth as they raised prices to offset increased costs due to inflation.

For the first nine months of 2023, Nestlé’s organic sales growth was 2%, significantly lower than the 7.8% growth seen in the same period of 2022.

As part of the company’s restructuring, Nestlé announced several changes to its leadership structure. These include merging the Latin America and North America divisions into a single Americas unit and incorporating the Greater China region into the Asia, Oceania, and Africa zones. The company is also reshuffling its executive board. These changes aim to streamline operations and improve the company’s performance in a challenging market environment.