Nestl\u00e9 growth strategy overviewNestl\u00e9 prioritises RIG growth over pricing, acquisitions and portfolio changesCoffee and Petcare remain central to Nestl\u00e9\u2019s growth ambitionsEmerging markets growth is driven primarily by market share gainsChina recovery continues through operational simplification and consumer focusFuture success depends on execution, targeted investment and innovation<\/p>\n
For years, Nestl\u00e9\u2019s strategy has been firmly focused on growth through scale. <\/p>\n
It\u2019s expanded rapidly across the globe and established the world\u2019s biggest brand portfolio in the process.<\/p>\n
But times are changing and scale no longer automatically equals success. In fact, it\u2019s increasingly being seen as a limitation.<\/p>\n
As a result, Nestl\u00e9\u2019s shifting away from scale and towards targeted investment in high-growth opportunities. A strategy underpinned by a renewed focus on real internal growth (RIG).<\/p>\n
Nestl\u00e9\u2019s new strategy<\/p>\n
The Swiss multinational\u2019s switched to prioritising real internal growth, rather than relying on pricing, portfolio changes and acquisitions.<\/p>\n
\u201cRIG is my specialist subject and a huge priority for us,\u201d says executive vice president, Anna Olive Manz while speaking at the Barclays Global Consumer Conference. \u201cDriving growth drives margin, drives cash, drives all of it.\u201d<\/p>\n
And the strategy appears to be working. <\/p>\n
\u201cWe\u2019ve now had four solid quarters of RIG-led growth,\u201d she says.<\/p>\n
Though the infant formula crisis<\/a> continues to weigh on the company\u2019s performance, despite \u201csteady progress\u201d made in the category\u2019s recovery.<\/p>\n Selective investment<\/p>\n Another sizable shift in Nestl\u00e9\u2019s business strategy is what Manz describes as a move away from \u201caveraging\u201d investment across the portfolio.<\/p>\n Historically, Nestl\u00e9 applied similar performance expectations to all categories. Now, it\u2019s concentrating resources on its strongest performers, including cold coffee, ready-to-drink (RTD) coffee and therapeutic pet nutrition.<\/p>\n And to make sure the business continues to invest in the highest-growth categories, performance is now tracked quarterly rather than annually.<\/p>\n This goes for marketing too, with the business reducing the number of brands it\u2019s putting media investment into from 400 down to to 120. That\u2019s a huge reduction, but it doesn\u2019t necessarily mean the 280 brands losing media investment are losing out completely. <\/p>\n \u201cThey\u2019re things like Carnation milk,\u201d says Manz. \u201cYou don\u2019t need media on Carnation milk. You need brilliant in-store promo, you need brilliant activation, but not media. So getting super clear on what needs what.\u201d<\/p>\n Coffee and Petcare lead<\/p>\n Nestl\u00e9 announced the establishment of its Four Pillars<\/a> \u2013 Food & Snacks, Coffee, Nutrition, and Petcare \u2013 in February.<\/p>\n And, while all remain fundamental to the food and beverage giant\u2019s future, Coffee and Petcare sit at the centre of its long-term growth ambitions.<\/p>\n Coffee\u2019s evolving far beyond its traditional role as a hot breakfast beverage, with Nestl\u00e9 seeing significant opportunities in cold coffee, RTD formats, functional beverages and products designed for younger consumers. Innovations such as Starbucks Refreshers Concentrate are intended to expand coffee consumption into entirely new occasions.<\/p>\n Meanwhile, Petcare continues to be one of Nestl\u00e9\u2019s most fast-growing and dynamic categories, with emphasis being placed on premium wet cat food, where innovation and consumer willingness to trade up are driving strong growth.<\/p>\n \u201cCats from a CFO\u2019s perspective are brilliant,\u201d says Manz. \u201cThey\u2019re super picky eaters. So if you give them a better food, they won\u2019t go back and eat the old food. And that\u2019s why being able to innovate into the cat space is wonderful, because it gives the opportunity for the consumer to trade up.\u201d<\/p>\n Beyond its core categories, the company\u2019s also benefiting from strong momentum in emerging markets.<\/p>\n Emerging markets<\/p>\n Nestl\u00e9\u2019s strongest growth momentum is currently coming from emerging markets.<\/p>\n Latin America, Southeast Asia and Africa has seen widespread growth, with countries including Brazil, Mexico and the Philippines proving to be increasingly important for the multinational.<\/p>\n This, says Manz, is driven less by improvements in local economies and more by Nestl\u00e9\u2019s ability to gain market share through stronger execution and innovation.<\/p>\n \u201cIt\u2019s not consumption driving growth. It\u2019s market share-led growth.\u201d<\/p>\n And that distinction matters. If Nestl\u00e9 can continue gaining share through innovation and improved execution, growth becomes more durable and less dependent on economic cycles.<\/p>\n However, not all emerging markets are following the same trajectory. While Nestl\u00e9\u2019s gaining momentum across much of Latin America, Southeast Asia and Africa, China remains a more complex turnaround story.<\/p>\n China<\/p>\n Weak category growth and soft consumer demand continue to stifle growth in China.<\/p>\n As a result Nestl\u00e9 has spent the past 12 months shifting away from a distribution-led model, which prioritised expanding reach into lower-tier cities across the Asian nation, and towards a strategy centred on consumer demand and consumption.<\/p>\n That\u2019s involved simplifying distribution networks, reducing excess inventory, streamlining sales teams and cutting the number of stock-keeping units (SKUs) on shelves. It\u2019s also become more targeted in its approach to innovation and marketing, focusing on the products and consumer trends that are most likely to drive demand.<\/p>\n And early signs, says Manz, are encouraging, with \u201cgood progress overall\u201d. Market share is beginning to stabilise in several categories and some businesses, including ready-to-drink coffee, are showing improved volume trends. But there\u2019s a long way to go.<\/p>\n \u201cIt\u2019s going to take us a little bit of time to go from a share loss situation to consistently holding share and then outperforming our categories.\u201d<\/p>\n North America<\/p>\n While growth is accelerating in many parts of the business, North America remains a key area of focus. Representing roughly a third of Nestl\u00e9\u2019s sales, the region recorded flat RIG in the second quarter, a performance Manz described as \u201cnot acceptable\u201d.<\/p>\n Importantly, she doesn\u2019t believe weakening consumer demand is the primary issue. Instead, she points to a combination of category-specific challenges in frozen food, ongoing efforts to turn around the Gerber infant nutrition business and operational issues within Coffee Mate creamers.<\/p>\n \u201cThe consumer is weak in North America, but it hasn\u2019t deteriorated.\u201d<\/p>\n In other words, if Nestl\u00e9 can improve execution in underperforming businesses while maintaining momentum in stronger categories such as Coffee and Petcare, North America could become a significant contributor to future growth.<\/p>\n The same focus on execution is also shaping how the business thinks about its wider portfolio, particularly with regards to mergers and acquisitions.<\/p>\n Mergers and acquisitions<\/p>\n The world\u2019s biggest CPG has been actively reshaping its portfolio, selling its mainstream VMS business<\/a>, 50% of its Waters business<\/a> and exiting Ice Cream<\/a> in the past year.<\/p>\n Yet transformational deals are not a priority. Instead, Nestl\u00e9\u2019s focus is on extracting greater value from the businesses it already owns. <\/p>\n \u201cThe single biggest way for us to drive shareholder returns right now is organic growth, accelerating growth, improving margins, improving cash returns,\u201d she explains. \u201cAnd when we\u2019ve got the businesses we own really motoring, that puts us in much better shape to do bolt-ons. It also means if we dispose of anything, we\u2019re disposing of it at higher value.\u201d<\/p>\n Nestl\u00e9\u2019s focus on organic growth and value creation is also shaping how it approaches one of the industry\u2019s biggest emerging opportunities \u2013 artificial intelligence.<\/p>\n Artificial intelligence<\/p>\n Artificial intelligence (AI) is a subject Nestl\u00e9 and everybody else is in the industry is \u201cvery focused on\u201d says Manz.<\/p>\n The multinational\u2019s already monitoring how consumers use AI tools to search within its categories, analysing the prompts they enter and the types of questions they ask. <\/p>\n Understanding that behaviour is becoming increasingly important as AI begins to influence purchasing decisions in much the same way that search engines and social media have done over the past two decades.<\/p>\n The company\u2019s also tracking how its brands appear in AI-generated responses and measuring how often Nestl\u00e9 products, websites and research are referenced when consumers seek advice on topics ranging from nutrition to confectionery.<\/p>\n Manz believes the company\u2019s vast library of scientific research, nutritional expertise and consumer insights could become a competitive advantage in an AI-driven world.<\/p>\n It\u2019s not just about showing up well as a brand name, she explains. It\u2019s about being one of the cited places that the LLMs, go to for information.<\/p>\n As AI increasingly becomes a gateway between consumers and brands, that could prove critical.<\/p>\n Beyond scale<\/p>\n The Nestl\u00e9 of the future is likely to look very different from the one we know now.<\/p>\n Rather than spreading investment evenly across categories and geographies, the company\u2019s progressively directing resources towards those that promise the strongest growth and highest returns.<\/p>\n In doing so, it\u2019s betting on disciplined execution and targeted investment, rather than scale alone, to define its long-term success.<\/p>\n","protected":false},"excerpt":{"rendered":"Nestl\u00e9 growth strategy overviewNestl\u00e9 prioritises RIG growth over pricing, acquisitions and portfolio changesCoffee and Petcare remain central to…\n","protected":false},"author":2,"featured_media":128220,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[126],"tags":[147,1119,1121,1122,1124,1126,1127,30455,30456,6023,1129,8467,21632,30457,1131,272,30458,30459,30460,30461,1134,30462,199,30464,30463,29949,30465,2543,1137,1139,41],"class_list":["post-128219","post","type-post","status-publish","format-standard","has-post-thumbnail","category-nestle","tag-advertising","tag-beverage","tag-brand","tag-building","tag-company","tag-corporate","tag-corporation","tag-emblem","tag-entrance","tag-european","tag-exterior","tag-french","tag-front","tag-head-office","tag-headquarter","tag-international","tag-issy","tag-issy-les-moulineaux","tag-logotype","tag-main-office","tag-multinational","tag-name","tag-nestle","tag-nestle-france","tag-nestle-headquarter","tag-nestle-office","tag-outdoor","tag-paris","tag-product","tag-signage","tag-swiss"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/117241109768755209","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/128219","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=128219"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/128219\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/128220"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=128219"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=128219"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=128219"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}