Nestlé, the world’s largest food and beverage company, unveiled a comprehensive plan on Tuesday to drive growth and cut costs as it faces economic headwinds and changing consumer behaviors. CEO Laurent Freixe, who took over in September, laid out a roadmap that includes €2.7 billion in cost reductions, increased investments in advertising, and the creation of a dedicated unit for its premium water and beverage brands.
Freixe’s strategy was presented during an investor day at Nestlé’s headquarters in Vevey, Switzerland, marking his first major initiative since replacing Mark Schneider as CEO. The plan focuses on appealing to price-sensitive consumers while preserving brand equity and long-term profitability.
Nestlé plans to achieve €2.7 billion in savings by 2027, building on €1.2 billion in ongoing cost reductions. The company aims to increase its organic growth—a metric that excludes currency effects, acquisitions, and divestitures—to at least 4% by 2027, up from the 2% forecast for 2024. However, profitability goals are more modest than those set by the previous CEO, with the underlying profit margin target now at 17%, compared to the earlier range of 17.5% to 18.5%.
In recent years, Nestlé raised prices to offset rising costs in transport, packaging, and raw materials caused by supply chain disruptions and geopolitical tensions, including the war in Ukraine. These price hikes, however, have driven many consumers toward supermarket private-label brands, reducing demand for premium products. Freixe acknowledged the need to reinvigorate growth while maintaining price competitiveness.
Nestlé plans to ramp up advertising and marketing expenditures to 9% of total turnover by the end of 2025, returning to pre-pandemic levels. The company spent 7.7% of its turnover on advertising in 2023. “For our brands to establish themselves on the market, we must invest,” Freixe emphasized.
A key component of the new strategy is the creation of a separate entity for Nestlé’s premium waters (such as Vittel, Perrier, and San Pellegrino) and high-end beverages (including Nesquik, Nestea, and Nescafé). This entity, set to launch on January 1, 2025, will be led by Muriel Lienau, who currently oversees Nestlé Waters Europe.
The move aims to streamline operations and foster growth in these product lines, allowing them to operate with greater focus and agility.
Analysts have received the announcements cautiously, describing the medium-term goals as “unspectacular but realistic.” While the plans are seen as pragmatic, there is uncertainty about how investors will respond, given the company’s more modest profitability ambitions.
As Nestlé navigates a challenging economic environment, its efforts to balance cost-cutting, investment, and restructuring could play a pivotal role in maintaining its position as a leader in the global food and beverage industr
