By John Revill
ZURICH (Reuters) – Nestle shares were expected to fall early on Friday following the abrupt departure of CEO Mark Schneider from the world’s biggest foodmaker and his replacement by company veteran Laurent Freixe.
Schneider’s surprise exit was announced late on Thursday following a board meeting that put an end to the near eight-year tenure at the helm by the 58-year-old German, the first company outsider to lead Nestle in nearly a century.
Investors, whose confidence in Schneider had waned over the last 15 months, appeared rattled as shares in the maker of KitKat chocolate bars and Nescafe instant coffee were indicated nearly 3% lower in premarket activity in Zurich.
Freixe, a 62-year-old Frenchman, is seen as knowing the food industry inside and out, with a broad network within and outside the Swiss giant.
He is expected to increase Nestle’s focus on sales and marketing after the company trailed rivals like Danone and Unilever (LON:) in recent quarters.
Critics argue Nestle has been too reliant on price increases, which have hit sales volumes as cash-strapped customers turned to cheaper brands.
A popular figure at Nestle’s HQ in Vevey, next to Lake Geneva, Freixe has already started work in his new role, but knows it will take time to rebuild market share and increase sales volumes in a tough market.
“There will always be challenges, but we have unparalleled strengths,” he said. “We can strategically position Nestle to lead and win everywhere we operate.”
He is used to challenging times, having led Nestle’s European business in the wake of the global financial crisis before heading the business in the Americas.
Most recently he has been head of Nestle’s Latin America zone, which has seen strong growth in recent years.
“With Laurent Freixe in charge, the priority for Nestle will be to go back to its roots, its fundamentals. He’s a sales and marketing guy with a real passion for the products,” said Jean-Philippe Bertschy, an analyst at Bank Vontobel.
“If you look at successful food companies lately, like Lindt and Danone among others, they all have marketing and sales people as CEO.”
Restoring sales growth will be vital to winning the trust of investors, Bertschy said.
After hitting an all-time high in January 2022 as Nestle enjoyed a pandemic-driven boom, the company’s shares have been on a downward slide since May 2023 after a series of mishaps, earnings misses and guidance downgrades.
Schneider had drawn praise for attempting to shake up the firm, selling its U.S. confectionery unit to Ferrero for $2.8 billion in 2018 and, three years later, several North American water brands to two private equity firms for $4.3 billion.
But his drive to turn around the fortunes of the foodmaking giant did not come quickly enough for investors.
There were also missteps. Nestle paid $2 billion to take complete ownership of a maker of treatments for peanut allergies, but sold the business three years on, with analysts saying the company suffered a big loss.
Read the full article here
