In a bold strategy to streamline operations, Nestlé announces plans to cut costs by £2.2bn and separate its water and premium drinks division by 2027.
Nestlé, under the leadership of its new CEO Laurent Freixe, has revealed a comprehensive plan to achieve savings of £2.2bn by the year 2027. This ambitious target involves rolling savings of £1.07bn, alongside a notable increase in advertising and marketing investments.
Currently, Nestlé allocates 7.7% of its sales to marketing and advertising. However, by 2025, this figure is expected to rise to 9%, signifying the company’s intention to bolster its brand presence and consumer engagement. This increase demonstrates Nestlé’s commitment to maintaining a competitive edge in the global market.
In addition to cost-cutting measures, Nestlé will establish a separate global unit for its water and premium drinks business starting January 2025. CEO Laurent Freixe believes this restructuring will enhance innovation and drive sales. Freixe stated, ‘Nestlé is a strong company with global reach, exceptional demand generation and in-market capabilities. Our iconic brands and innovative products connect with people every day.’
Further, the reallocation of resources aims to unlock the full potential of Nestlé’s product portfolio. The company is set to invest more in its brands and growth platforms, with the goal of becoming more efficient and responsive, thus increasing value for stakeholders.
Since taking over as CEO, Freixe has also implemented significant organisational changes to create a ‘leaner’ business model. This came in response to a period of weaker-than-expected sales, necessitating a revision of Nestlé’s operational tactics to better address market challenges.
Nestlé’s strategic reorganisation and cost reduction plans signify a crucial phase in the company’s evolution, aiming to enhance efficiency and market competitiveness.
