In a significant shift of operations, Nestlé has outlined ambitious plans to enhance efficiency and foster innovation by 2027. The company’s reorganisation and cost-cutting strategy aims to save £2.2 billion while investing more in marketing and creating a separate global unit for its water and premium drinks businesses.
CEO Laurent Freixe, who assumed his position in September, has set a target of reducing costs by £2.2 billion (2.5 billion Swiss francs) by 2027. This is in addition to rolling savings of £1.07 billion (1.2 billion Swiss francs). Meanwhile, Nestlé intends to increase its investment in advertising and marketing, aiming to raise these expenses to 9% of total sales by 2025. In 2023, such expenses accounted for only 7.7% of sales, indicating a significant planned increase.
As part of its strategic restructuring, Nestlé will separate its water and premium drinks segment, forming a new global unit starting January 2025. Laurent Freixe expressed confidence that this new alignment would spur both innovation and sales growth at Nestlé. He stated, “Nestlé is a strong company with global reach, exceptional demand generation and in-market capabilities. We have a diverse and strategically well-positioned product portfolio. Our iconic brands and innovative products connect with people every day, at every stage of their lives.”
These changes follow Freixe’s initial moves as CEO, where he streamlined the business and its executive team to enhance operational efficiency. This restructuring comes amid adjustments in the company’s guidance after sales did not meet expected targets.
Freixe further elaborated on the company’s strategic advantages, highlighting Nestlé’s unique position in the market. He asserted that investing in their brands and growth platforms would enable the company to unlock the full potential of its products for consumers while delivering value to stakeholders. He emphasised improving operational efficiency to make Nestlé more responsive and agile.
Nestlé’s decision to realign its business structure and focus on cost reductions reflects its strategic drive to maintain market leadership and foster growth through innovation. By investing more heavily in marketing and separating its water and premium drinks units, the company aims to leverage its strengths and adapt to evolving market demands. These actions underscore Nestlé’s commitment to providing value and responding effectively to the needs of consumers and stakeholders alike.
