Nestlé Announces Major Workforce Reduction as Growth Strategy Shifts into High Gear
Nestlé, the Swiss owner of KitKat, Nescafé, and Purina, revealed plans to shed about 16,000 jobs over the next two years as part of a broader effort to cut costs and accelerate growth. The announcement marks a bold acceleration of restructuring under the company’s new chief executive, Philipp Navratil, who has pledged to pursue efficiency with a focus on high-potential opportunities.
Who Is Affected and Why Now
The job cuts are expected to include roughly 12,000 white-collar roles and 4,000 positions in manufacturing and the supply chain, representing nearly 6% of Nestlé’s global workforce. Navratil said the reductions are a response to a rapidly changing business landscape and a need to realign resources to where they can generate the strongest returns. He added that the process would be conducted with respect and transparency as the company seeks to protect core capabilities while shedding less productive activities.
A New Chapter Under Navratil
Navratil, who took the helm after replacing Laurent Freixe amid controversy over a disclosed relationship with a subordinate, framed the cuts as part of a broader plan to free up cash and fund higher-return investments. He reiterated the company’s aim to save SFr3 billion by 2027, up from the previous target of SFr2.5 billion, signaling a more ambitious path to debt reduction and enhanced shareholder value.
Strategic Priorities: Grow, Invest, and Innovate
Beyond cutting costs, Navratil emphasized a strategy centered on investing at scale and speeding up innovation. Nestlé wants to push growth momentum by prioritizing opportunities and businesses with the highest potential returns, and by strengthening its portfolio in core categories such as coffee, confectionery, and other popular consumer brands.
Financial Performance and Market Context
In the first nine months of the year, Nestlé reported a 1.9% year-on-year decline in sales to SFr65.9 billion, a drop Fabricted mainly by negative foreign exchange effects of 5.4%. On an organic basis, however, sales grew by 3.3%, reflecting a modest underlying expansion as the company navigates inflationary pressures that have pushed some prices higher in various markets. The growth is being driven by higher prices rather than volume in some segments, underscoring the need for efficiency to maintain margins.
Regional Performance and Market Outlook
Geographically, all regions contributed to organic growth, with emerging markets up 5.2% and developed markets up 2.1%. The regional mix highlights Nestlé’s exposure to different economic cycles and consumer pricing dynamics, reinforcing the case for tighter resource allocation and a sharper focus on high-return initiatives.
Industry Perspective
Analysts see Navratil’s plan as a clear signal that Nestlé intends to move away from complacency toward more aggressive cost management and strategic investment. Chris Beckett, a consumer staples analyst at Quilter Cheviot, described the move as indicating a break from “business as usual.” He noted that while Nestlé has a storied history and a broad portfolio, the company is still a work in progress as it seeks to regain momentum and restore historic growth trajectories.
As Nestlé navigates its layoffs and rising costs, the company will need to balance efficiency with a focus on product quality and innovation to sustain consumer trust. The balance between price discipline, investment in growth areas, and maintaining a robust supply chain will be critical to delivering the ambitious 2027 target while supporting long-term brand value.
