4 Big Issues Facing New Nestlé CEO Laurent Freixe

Nestlé has cut sales growth outlook for 2024 to 2% from 3% seen earlier, weeks after naming Laurent Freixe as its new CEO.

The Swiss foodmaker is struggling to rebuild market share after higher prices turned consumers off branded products. Since then, it’s had trouble luring them back.

Like many in the industry, Nestlé is also grappling with economic pressures, supply chain disruptions and changing consumer behaviours.

For instance, 60% of consumers attempted to reduce the amount of meat they ate in 2023, indicating a shift in dietary preferences which Nestlé must adapt to.

The maker of Nescafe coffee and Purina pet food now expects organic sales to rise around 2% in 2024, below the previous forecast of at least 3%. Growth of 2% would be the lowest annual rate for Nestlé since at least 2000.

“For a supertanker like Nestlé, the miss in just a few months is enormous,” Vontobel analyst Jean-Philippe Bertschy said in an analyst note.

Laurent Freixe abruptly replaced Chief Executive Officer Mark Schneider in September 2024, shifting from an outsider who previously ran a health-care company to an insider who climbed the Swiss company’s executive ranks focusing on sales and marketing.

Freixe has been a lifer at Nestle, having joined the firm in 1976 and then worked his way up the ranks, joining the executive board in 2009 as Executive Vice President for Zone Europe, before going on to become CEO of Zone Americas and, most recently, CEO of Zone Latin America. 

He is known for his strategic acumen, extensive market experience and deep understanding of Nestle’s customers. 

Announcing the nine-month results, Freixe admitted that “consumer demand has weakened in recent months, and we expect the demand environment to remain soft”.

4 big issues facing new Nestlé CEO 

Child labour and fair wages

One of Nestlé's most pressing issues continues to be allegations of child labour in its cocoa supply chain. The company has faced criticism for sourcing cocoa from farms in West Africa where child labour is prevalent.

Sustainability concerns

Nestlé has been under scrutiny for its environmental impact, particularly regarding:

• Palm oil sourcing: The company has faced backlash for its connections to suppliers linked to deforestation in Southeast Asia.
• Water extraction: Nestlé has encountered protests over its water bottling operations, especially in drought-affected areas such as California.

Unhealthy food products

Nestlé is heavily reliant on sales of less healthy food products, which exposes the company to significant business risks and contributes to public health concerns. Nestle fought off a shareholder resolution earlier this year to push it to increase the proportion of sales from healthier products. Research has shown that about 70% of Nestle’s sales in the UK were of foods high in fat, salt and sugar. 

Transparency and reporting

Nestle has also been criticised for opaque sustainability reporting, including insufficient disclosure of greenhouse gas emissions, particularly Scope 3 emissions, and lack of detail on capital expenditures related to climate objectives.

How Freixe is going to turn Nestlé around

To turn the supertanker around, Nestlé is working on improving transparency, committing to sustainable practices, and focusing on increasing sales of healthier products.

The company is also exploring ways to streamline its organisation to improve efficiency and adapt to changing market conditions.

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