Unlocking Growth: An Outside-In Lens on Nestlé’s Journey Ahead

Nestlé , the world’s largest food and beverage company, has weathered many storms over its 157-year history. Yet, the past five years have tested its resilience in new ways. From navigating inflationary pressures to shifting consumer priorities and managing a vast portfolio of over 2,000 brands across 188 countries, the challenges have been immense.

The numbers tell part of the story:

• Nestlé’s stock has declined by 26.28% over the past five years, signaling investor concerns around growth trajectory and pricing strategy.
• In 2024, sales volumes fell by 2.4%, reflecting the strain of successive price hikes averaging 20% over five years, with 10.6% increases in Europe alone in 2024.
• A leadership transition occurred in mid-2024, with the unexpected departure of Mark Schneider as CEO. This move, followed by the appointment of Laurent Freixe, signaled a need for renewed focus and fresh strategic direction.

While these developments present challenges, they also highlight an opportunity for recalibration. Under Laurent Freixe, Nestlé has outlined a clear and thoughtful strategy to tackle key areas:

• Saving $2.8 billion through cost optimization.
• Strengthening its billionaire brands like Nescafé, Purina & hopefully Nespresso.
• Reinvesting in #PurposefulMarketing to rebuild consumer engagement.
• Adjusting #pricing to restore affordability and retain market share.

This plan provides a robust foundation.

Having worked in the organisation at HQ and other markets, however, implementing such strategies at Nestlé’s scale requires alignment, targeted actions, and tailored solutions for its diverse markets.

Most important, I feel, is good #people alignment towards a common global vision, yet customised and implemented as per local needs.

Drawing from experiences with organizations undergoing similar transitions, I believe complementary initiatives can enhance this roadmap, enabling Nestlé to unlock its full potential.

Here is my outside-in and bit of inside-out recommendations for Nestlé brands.

Understanding the Current Landscape

1. Pricing Challenges and Consumer Sensitivity

To offset inflationary pressures, Nestlé raised prices significantly over five years. While this protected margins, it contributed to a 2.4% decline in sales volumes in the first nine months of 2024. In some regions, this opened the door for private-label and value brands to gain ground.

Why It Matters: Balancing affordability with profitability is critical for retaining consumer trust and loyalty in the highly competitive FMCG sector.

2. Reduced Consumer Engagement

Marketing and advertising budgets were reduced during the pandemic, weakening consumer engagement in key categories like bottled water (CHF 3.3 billion revenue) and confectionery (CHF 8.1 billion revenue). Competitors that doubled down on marketing during this time, like Procter & Gamble, saw 9% growth in key segments by aligning campaigns with evolving consumer needs.

Why It Matters: Reinvesting in demand generation is necessary to rebuild Nestlé’s brand presence and recover lost market share.

3. Operational Complexities and Regional Challenges

Nestlé’s global footprint brings operational complexity. Supply chain inefficiencies, exacerbated by geopolitical tensions such as the Middle East conflict, have disrupted logistics. Limited use of advanced tools like IoT and blockchain for inventory tracking has further constrained responsiveness.

Why It Matters: Operational agility is key to maintaining product availability, optimizing costs, and ensuring customer satisfaction.

4. Leadership Transition and Investor Sentiment

The unexpected leadership change in 2024 underscored a sense of urgency in addressing strategic challenges. The market has been watchful of Nestlé’s ability to reignite growth while maintaining stability. While Laurent Freixe’s appointment has brought renewed focus, investor sentiment highlights the importance of clear, actionable plans to sustain long-term value.

Why It Matters: Leadership transitions often serve as turning points for organizations. Effective execution of strategies under new leadership can help restore confidence among stakeholders.

A Strategic Blueprint: Making Transformation Actionable

Laurent Freixe strategy to save $2.8 billion, strengthen billionaire brands, reinvest in marketing, and adjust pricing is a strong starting point.

To compliment the thinking, Formula2GX Digital believes in sharing experience on how one can enhance this roadmap to deliver value through measurable outcomes.

Here are few strategic ideas that I would love to share and would be very interested to see Nestle and other companies and even agencies adding, complimenting, constructively criticising and enhancing this article.

1. Amplify Digital Transformation

What It Means for Nestlé: Digital transformation involves embedding technology across Nestlé’s value chain to optimize operations, engage consumers, and drive innovation. Given Nestlé’s scale, deploying digital tools for real-time decision-making and consumer engagement can provide significant advantages.

I witnessed the beginning of this transformation journey 10 years ago, collaborating with incredible leaders behind the scenes. Even then, a significant challenge was that while many employees and senior leaders had brilliant ideas, those ideas often went unheard or were not executed effectively. Today, the key to overcoming this lies in adopting a #ConsumerFirst mindset enabled by #PeopleChange agents, not just on paper and power point slides, but truly believing in it and empowering those who care.

How Nestlé Can Act:

• Consumer Insights: Deploy AI to analyze consumer preferences. For instance, Mondelez used AI to create “Oreo Thins,” resulting in a 5.2% sales boost in North America. Nestlé could apply similar methods to Nescafé and Maggi to identify emerging trends and deliver localized products.
• Supply Chain Digitization: Implement IoT sensors and blockchain for inventory tracking. PepsiCo achieved $50 million in annual savings through IoT-enabled logistics, a model Nestlé can emulate.

Impact:

• Predictive analytics could drive a 2–4% sales uplift in underperforming categories like bottled water.
• Streamlined logistics could save multi-million annually, improving margins.
• Expanded direct-to-consumer (DTC) platforms could generate multi-billion dollars in recurring revenue. (only if designed and implemented right).

2. Revolutionize Supply Chains with Advanced Digital Solutions

Why It’s Critical: Nestlé’s operations span 188 countries, making supply chain efficiency a cornerstone of profitability. Geopolitical disruptions, rising logistics costs, and increased demand for supply transparency require a more agile and data-driven approach. Basic IoT implementation is likely already in progress, so Nestlé needs to move beyond tracking to optimizing end-to-end processes in real-time.

How Nestlé Can Act:

1. Dynamic Routing with AI and Machine Learning: Implement AI-driven platforms to optimize transportation routes dynamically based on weather, geopolitical factors, and real-time demand fluctuations.
2. Blockchain for Transparency: Use blockchain to ensure complete traceability of high-value products like Nespresso coffee. This enhances consumer trust, particularly in markets demanding ethical sourcing transparency.
3. Smart Warehousing and Robotics: Automate warehouses to handle inventory dynamically, reducing lead times and labor costs.

Impact:

• Potential to save multi-million annually by optimizing logistics and reducing waste.
• Enhanced consumer trust and market share through traceable, transparent supply chains.

3.Leverage Predictive AI to Drive Consumer-Centric Innovation

Why It’s Critical: Nestlé’s product portfolio spans categories from pet care (CHF 18.8 billion) to beverages (CHF 24.8 billion). Identifying emerging consumer preferences quickly is critical for maintaining relevance in high-growth categories. Standard product development timelines can no longer keep pace with rapidly shifting demand.

How Nestlé Can Act:

1. AI-Enhanced Product Development: Use predictive analytics to identify niche opportunities within health-conscious, plant-based, and functional food segments.
2. Localized Product Personalization: Use AI to tailor products for specific regional tastes by analyzing consumption data.

Impact:

• Potential for a 3–5% revenue increase in targeted categories.
• Acceleration of product development timelines by 30–40%, reducing time-to-market.

4.Transform Emerging Markets with Affordable, Scalable Strategies

Why It’s Critical: Emerging markets account for 22% of Nestlé’s revenue, yet economic barriers often limit brand penetration. Catering to these regions with scalable, cost-effective strategies can unlock substantial growth potential.

How Nestlé Can Act:

1. Low-Cost Packaging Innovation: Introduce refillable and small-sized packages for products like Milo, Nido, and Maggi.
2. Hyper-Local Distribution Models: Partner with local small-scale distributors to penetrate remote regions.
3. Affordable Premiumization: Develop “entry-level” premium products like smaller-sized Nespresso pods or single-serving Maggi Gourmet meals, creating aspirational value at lower price points.

Impact:

• A 1% market share gain in emerging markets could contribute millions annually.
• Sustainability-focused packaging could reduce waste by 15–20%, enhancing brand equity.

5. Boost Sustainability and Circular Economy Leadership

Why It’s Critical: Consumers, especially Millennials and Gen Z, demand authentic sustainability commitments. Nestlé’s 13.58% reduction in GHG emissions since 2018 is commendable, but further efforts in areas like circular packaging and sustainable sourcing are critical for retaining consumer trust in premium markets.

How Nestlé Can Act:

1. Reusable Packaging Programs: Expand partnerships with Loop for refillable containers across high-frequency categories like Nescafé and KitKat.
2. Net-Zero Farming Partnerships: Invest in regenerative agriculture to offset carbon emissions while supporting local farmers.
3. Sustainability Metrics for Consumers: Introduce on-pack sustainability scores to educate consumers and reinforce Nestlé’s leadership in green practices.

Impact:

• Enhanced loyalty could drive a 2–3% sales uplift in environmentally conscious markets like Europe.
• Cost reductions in materials through circular packaging could save millions annually.

6. Foster a Resilient Organizational Culture

What It Means for Nestlé: Aligning its workforce across regions and functions is critical for Nestlé to execute its strategies effectively. Empowering employees to adopt new technologies and embrace sustainability goals will ensure successful implementation.

How Nestlé Can Act:

• Launch reskilling programs focused on digital tools and data analytics.
• Create cross-functional teams to drive innovation and collaboration.
• This article shares some ground breaking ideas from Michael Miebach leadership style with Mastercard , garnering over 30K+ views, it shares lessons for local and global leaders and could be of interest to the new management.

Impact:

• Improved alignment could accelerate cost savings by 10–15%.
• Enhanced execution timelines for critical initiatives.

Conclusion: Turning Strategy into Action

Laurent Freixe your plan (at least that shared publicly), lays out a robust roadmap for addressing Nestlé’s challenges, showcasing a thoughtful balance between resilience and innovation.

Over the past decade, I have had the privilege of witnessing this transformation journey unfold, working with remarkable leaders behind the scenes. While the road has not been without its complexities, Nestlé’s ability to adapt and align with shifting market dynamics continues to inspire me, even today.

Few of my proudest achievements with Nestlé were designing and building the Nestlé Consumer Journeys. Equally rewarding was creating the first gamified digital platform that bridged the gap between business and IT, fostering seamless interaction and integration through a shared language—Consumer.

A key challenge, both then and now too, I believe, has been ensuring that great ideas—from employees and senior leaders alike—are not only heard but effectively executed. Today, the #ConsumerFirst mindset provides a clear path to overcoming these hurdles, placing the consumer at the heart of every decision and action.

As Nestlé embraces digital transformation, localized innovation, sustainability, and organizational alignment, it is poised to redefine its role as a leader in the FMCG sector. This journey will undoubtedly require collaboration, creativity, and commitment from employees new and old, as well as support from investors. Together, these efforts can set new benchmarks for sustainable growth and global impact.

Laurent’s leadership, backed by #PaulBulcke deserves appreciation for navigating such a complex and transformative journey.

To everyone at Nestlé, I wish you all the best as you embark on this exciting chapter.

"To win in today’s market, the consumer must not only come first—they must feel it."

What are your thoughts on these strategies and the journey ahead for brands as powerful as Nestlé ?