Nestlé’s new CEO, Laurent Freixe, revised the company’s sales growth expectations for 2024 and announced a leadership overhaul on Thursday, signaling what one analyst described as a “painful reset” for the global food giant.
Freixe, who took over as chief executive on September 1, following the departure of Mark Schneider, faces the challenge of reviving slumping sales and managing fallout from recent product controversies. The Frenchman, formerly in charge of Nestlé’s Latin American operations, has been tasked with steering the company through turbulent times, as its diverse portfolio—from Nespresso coffee to Purina pet food and Haagen-Dazs ice cream—feels the strain of weakened consumer demand.
In its third-quarter report, Nestlé revealed sales of 67.1 billion Swiss francs ($77.4 billion) for the first nine months of 2024, marking a 2.4% decline from the same period last year. “Consumer demand has weakened in recent months, and we expect the demand environment to remain soft,” Freixe said in a statement.
Nestlé now anticipates organic sales growth of just 2% for the year, excluding currency and acquisition impacts. This comes after the company already lowered its annual sales forecast from 4% to 3% in July, as inflation-weary consumers turned to cheaper alternatives. In contrast, the company had enjoyed organic growth of 7.8% over the same period in 2023.
The leadership reshuffle includes merging the Latin America and North America divisions into a unified Americas unit, while the Greater China region will be absorbed into Nestlé’s Asia, Oceania, and Africa zone. “With these organisational changes, the leaders of key units driving our performance and transformation will now report directly to me,” Freixe explained, emphasizing the need to sharpen focus on consumers and accelerate brand investment and market share growth.
Analysts, anticipating Freixe’s recalibration of the company’s outlook, noted the severity of the new forecast. Andreas von Arx, an analyst at Baader Helvea, said, “The outlook revision looks more severe than expected,” while Jean-Philippe Bertschy of Vontobel called the reset “very painful for Nestlé, unprecedented in recent history.”
The challenges are compounded by Nestlé’s efforts to reassure consumers following concerns over traces of contamination at its Perrier water extraction sites in France. The company has since ramped up monitoring, insisting the water remains safe for consumption.
Bertschy concluded that Freixe faces a “huge task” in returning Nestlé to its core strengths of marketing and consumer connection, cautioning that the turnaround will take time.
