.jpg)
By John Revell
ZURICH (Reuters) – Nestle shares fell early on Friday after Chief Executive Mark Schneider’s surprise departure from the world’s largest food maker and his replacement by company veteran Laurent Freixe.
Schneider’s surprise exit was announced late Thursday following a board meeting that ended a nearly eight-year tenure for the 58-year-old German, the first outsider to lead Nestle in nearly a century.
Investor confidence in Schneider, which has been declining over the past 15 months, was shaken, with shares in the maker of KitKat chocolate bars and Nescafe instant coffee down about 4% after the start of trading.
Frix, a 62-year-old Frenchman with deep roots in Nestlé, has already started work in his new role, where he faces the task of rebuilding market share and increasing sales volumes in a tough market.
Nestle has lagged behind competitors such as Danone and Unilever (LON:) In recent quarters, the new CEO has immediately pledged to focus Nestlé on organic growth rather than acquisitions.
“We want to gain market share, and that comes back to investing in our brands. That comes back to investing in our growth platforms,” Freix told analysts on Friday.
“The focus will be on driving the existing portfolio. Organic growth is at the core. There may be adjustments to the portfolio of course, but again the top priority is pure organic growth.”
Critics say Nestlé relies too heavily on price increases, which has hit sales volumes as cash-strapped customers switch to cheaper brands.
A popular figure at Nestlé’s headquarters in Vevey, next to Lake Geneva, Fricks is used to tough times, having led Nestlé’s European business in the wake of the global financial crisis before heading the business in the Americas.
Most recently, he served as President of Nestlé’s Latin America region, which saw strong growth under his leadership.
“Under Laurent Freixe, Nestlé’s priority will be to get back to its roots and fundamentals,” said Jean-Philippe Bertsche, an analyst at Banque Vontobel. “He is a sales and marketing man with a real passion for the products.”
“If you look at the successful food companies recently, like Lindt, Danone, etc., they all have marketing and sales executives.”
“super tanks”
Bertsche added that restoring sales growth will be vital to gaining investor confidence.
After Nestle shares hit an all-time high in January 2022 as the company enjoyed a pandemic-fueled boom, the company’s shares have been on a downward slide since May 2023 following a series of unexpected mishaps, earnings misses and guidance cuts.
Schneider has been praised for trying to turn the company around, selling the U.S. confectionery unit to Ferrero for $2.8 billion in 2018, and three years later selling several North American water brands to two private equity firms for $4.3 billion.
But Nestle also paid $2 billion to take full ownership of a company that makes peanut allergy treatments, but sold the business three years later at what analysts called a huge loss.
The Swiss newspaper Neue Zürcher Zeitung described the company as a “supertanker” and said Nestlé’s weight in the domestic stock market made it vital to many pension funds, meaning pressure from investors to improve performance was high.
New Zealand Zurich also noted that executives keen to boost sales in the US are unlikely to be reassured by political moves to contain prices, pointing to Democratic presidential candidate Kamala Harris’ plan to tackle price gouging.
“Frix will be measured primarily by one thing: whether the stock price recovers over the long term,” the paper said.
