Nestlé unveils ambitious cost-cutting plan
Nestlé, the owner of KitKat and Nescafé, announced a sweeping restructuring that will see 16,000 jobs cut over the next two years. The company aims to streamline costs and accelerate sales growth as it faces a challenging macro backdrop, currency headwinds, and shifting consumer demand. The cuts represent about 6% of Nestlé’s global workforce, with 12,000 white-collar roles and 4,000 positions in manufacturing and supply chain affected.
New leadership signals a hardline approach
Philipp Navratil, who recently became chief executive, stressed that changes are necessary to adapt to a changing world. “The world is changing and Nestlé needs to change faster,” Navratil said, adding that the company would make difficult but essential decisions to reduce headcount while maintaining respect and transparency. His announcement accelerates the cost-saving plan previously put in motion by his predecessor.
Driving growth through efficiency and investment
Beyond layoffs, Nestlé is targeting savings of SFr3 billion by 2027, up from the prior goal of SFr2.5 billion. Navratil promised a more aggressive stance on investing at scale and driving innovation to deliver accelerated growth and value creation. The leadership change followed the contentious departure of Laurent Freixe, who was fired for failing to disclose a relationship with a subordinate, a move that also led to the resignation of the chair, Paul Bulcke. The leadership shake-up has added pressure on the company to demonstrate a clear path to higher returns.
Market performance and growth drivers
For the first nine months of the year, Nestlé reported a 1.9% decline in sales year over year to SFr65.9 billion, driven largely by negative foreign exchange effects of about 5.4%. On an organic basis, however, sales rose 3.3%, indicating underlying growth momentum when currency effects are stripped out. Navratil noted that inflationary pricing contributed to top-line gains in some markets, especially in coffee and confectionery. The company highlighted that higher costs for coffee and cocoa have weighed on margins, even as price increases supported revenue growth.
Geographic mix and near-term outlook
All regions contributed to organic growth, with emerging markets expanding by 5.2% and developed markets by 2.1%. The mix suggests Nestlé’s portfolio remains resilient across geographies, though profitability will depend on the company’s ability to manage input costs and maintain consumer demand in a price-sensitive environment. Analysts weighed in on the strategic shift, noting that Navratil’s leadership signals a break from the status quo and a willingness to take decisive action to arrest a slide in performance.
Analyst perspective
Industry observers welcomed the explicit focus on cost discipline and prioritizing high-potential opportunities. Chris Beckett, a consumer staples analyst at Quilter Cheviot, commented that Navratil’s approach signals a departure from “business as usual.” He noted that while Nestlé has ambitious targets, the execution will determine whether the company can restore growth and regain market share in a competitive landscape.
