Nestle announced plans to boost advertising and marketing, reduce costs by at least $2.8 billion by 2027, and establish a standalone global unit for its water and premium beverages businesses as part of a strategy to drive growth under new CEO Laurent Freixe.
The world’s largest food company aims to save at least 2.5 billion Swiss francs ($2.83 billion) by 2027, building on ongoing annual savings of around 1.2 billion Swiss francs. Nestle predicts medium-term organic sales growth exceeding 4% in stable operating conditions, with an underlying trading profit margin of 17%. This contrasts with an expected organic sales growth of about 2% for 2023.
To support growth, Nestle plans to increase its advertising and marketing investments to 9% of total sales by 2025, up from 7.7% in 2023, as revealed at the company’s capital markets day in Vevey. The water and premium beverages businesses will be spun off into a global unit starting January 1, 2025.
“Our action plan will enhance efficiency, agility, and responsiveness, delivering value to all stakeholders,” Freixe said.
Freixe, who has been with Nestle for nearly 40 years, stepped into the CEO role in September after Mark Schneider’s leadership drew criticism for weak sales volume growth. During Schneider’s tenure, Nestle reduced its marketing and advertising budgets, which, alongside less investment in innovation during the pandemic, impacted revenue and allowed competitors with better-advertised or more distinct products to gain market share.
Freixe intends to reinvest in key brands like Nescafe and Maggi. Nestle recently announced a global sponsorship deal between its KitKat brand and Formula 1, increasing the chocolate wafer brand’s marketing budget by nearly 20% this year.
“For our brands to succeed, we must invest,” Freixe emphasized. “We will fund this through efficiency gains and growth.”
