By John Revill and Richa Naidu
ZURICH/LONDON (Reuters) – Nestle will replace CEO Mark Schneider with business veteran Laurent Freixe, the Swiss food group said on Thursday, marking a change in leadership as it faces a challenge to grow sales.
Schneider has decided to step down as CEO and member of the board of directors after eight years leading the world’s largest packaged food company.
The 58-year-old German shifted the Swiss company away from its decades-old category-led structure in the wake of the COVID-19 pandemic, when the business boomed as people bought food and drinks to eat at home during lockdowns . .
But the company has been struggling lately. Last month it cut its full-year sales outlook and said it had to slow its price increases as cash-strapped customers became more price-conscious.
Under Schneider’s leadership, Nestlé shares reached their highest level in January 2022 before entering a downward trajectory since May 2023.
The CEO appeared to lose investor confidence as the maker of KitKat chocolate bars and Nescafe instant coffee significantly underperformed rivals such as Unilever (LON:).
While Unilever, Danone and other food makers have been able to reduce some product prices and increase sales volumes in recent quarters, Nestlé has struggled to regain consumer loyalty, which it lost due to price increases it had to implement after the pandemic and the Russian invasion of Ukraine.
Asked how its strategy would differ from Schneider’s, Freixe told reporters that Nestle, a company with more than 2,000 brands ranging from dog food to water and infant formula, would focus on its “core businesses.”
“I will pay a lot of attention to the core. I will of course not rule out mergers and acquisitions,” said Freixe. “But…the big message is focus on the core.”
Freixe, whose new role takes effect on September 1, joined the company in France in 1986 and led Nestlé’s European operations during the 2008 financial crisis.
He then led Nestle’s Americas division and from 2022 ultimately headed its Latin America division, where he oversaw strong growth in recent years.
He was an unsuccessful candidate for CEO in 2016, says Jefferies analyst David Hayes.
“After an increasingly difficult year, it is not a total surprise that there is a CEO change,” Hayes said.
The 62-year-old Freixe, a popular figure at Nestle’s headquarters in Vevey, next to Lake Geneva, is already settling into his new role but knows it will take time to rebuild market share and increase sales volumes. increase in a difficult market.
“There will always be challenges, but we have unparalleled strengths,” he said. “We can strategically position Nestlé to lead and win wherever we operate.”
In addition to his insider knowledge and broad network within Nestle, Freixe’s marketing and sales expertise was highlighted by analysts.
“He is a sales and marketing man with a real passion for the products,” says Jean-Philippe Bertschy of Bank Vontobel.
“If you look at successful food companies lately, like Lindt and Danone, among others, they all have marketing and sales people as CEOs.”
The move to Freixe also marks a return to Nestlé’s normal practice of promoting CEOs from within the company.
Schneider, the former boss of German healthcare company Fresenius, was its first external CEO in almost a century.
Kepler Cheuvreux analyst Jon Cox described Freixe as a “very safe pair of hands”, with the executive potentially deciding whether to prune weaker companies.
Freixe’s input could help turn around Nestlé’s underperforming health sciences unit, while its frozen food business in North America, which includes brands such as Lean Cuisine and DiGiorno, has also struggled.
Chairman Paul Bulcke said Nestle had not considered an external candidate before choosing Freixe.
“With Laurent you didn’t have to look outside,” Bulcke said.
