Nestle announces $2.8 billion cost-cutting plan, ramps up marketing to boost growth under new CEO

Freixe, a 40-year Nestle veteran, took over in September, succeeding Mark Schneider, whose tenure was marked by weak sales volume growth that frustrated investors.

Under Schneider, Nestle reduced spending on marketing and innovation during the COVID-19 pandemic, a decision that contributed to revenue challenges as consumers gravitated toward more affordable and innovative competitors.

At its capital markets day in Vevey, Switzerland, Nestle outlined a target of 2.5 billion Swiss francs ($2.83 billion) in cost savings by 2027, with an additional roll-out of 1.2 billion francs in savings.

The company also aims to boost advertising and marketing expenses to 9% of total sales by 2025, returning to pre-pandemic levels from 7.7% in 2023.

Nestle projects medium-term organic sales growth of over 4% in a typical operating environment, with an underlying trading profit margin of 17%.

For 2023, however, the company anticipates a modest 2% organic revenue growth.

Freixe emphasized a "fix rather than sell" approach to struggling brands.

"We don’t have a portfolio problem," he said, according to the report.

Finance chief Anna Manz echoed the sentiment, highlighting the focus on organic growth.

As part of its strategy, Nestle plans to spin off its premium beverage and water businesses into a global unit starting January 2025.

Freixe has also pledged to heavily invest in flagship brands like Maggi and Nescafe. "Our action plan will improve how we operate, making us more efficient, responsive, and agile," he said, underscoring Nestle's commitment to delivering value for stakeholders.