Nestlé, one of the world's largest food and beverage companies, is set to undergo a significant leadership change as CEO Mark Schneider steps down, to be replaced by company veteran Laurent Freixe. Schneider, who led the company for eight years, oversaw a strategic shift away from its traditional category-led structure, but faced growing challenges in recent years, particularly within the beverage sector.
Under Schneider's leadership, Nestlé expanded its premium beverage portfolio, focusing on brands like Nespresso, Perrier, and San Pellegrino while divesting regional consumer brands.
This strategic realignment was highlighted by the sale of its local Chinese water brands to Tsingtao Brewery Group in 2020 (inside.beer, 28.8.2020) and its regional spring water brands, purified water business, and beverage delivery service in the U.S. and Canada to One Rock Capital Partners and Metropoulos & Co. for USD 4.3 billion ins 2021. The transaction included well-known brands like Poland Spring and Pure Life but notably excluded Nestlé's international premium brands, such as Perrier, S.Pellegrino, and Acqua Panna, underscoring the company's commitment to high-end offerings. (inside.beer. 17.2.2021)
Nestlé's efforts to enhance its global water business also included a USD 2 billion investment in creating a market for recycled plastic, with the goal of making its entire water portfolio carbon neutral by 2025.
However, the focus on premium brands did not come without challenges. Nestlé has been struggling with several issues, including a class-action lawsuit in the U.S. over allegations of misbranding Perrier as mineral water, despite the source in France being contaminated and requiring treatment. This led to accusations that Perrier no longer met the standards for natural mineral water as stipulated by U.S. and French regulations. The scandal has significantly tarnished the brand's image and posed a major challenge for Nestlé in maintaining consumer trust in its premium offerings (inside.beer, 5.3.2024)
Not least due to the Perrier scandal, investor confidence has been deeply shaken, driving the stock price down. Recently, the company's shares have significantly underperformed compared to competitors like Unilever, which likely led to Schneider's eventual ouster.
Schneider's appointment in 2017, coming from the health-care sector, was considered an unconventional choice for Nestlé, a company that has traditionally promoted its CEOs from within its own ranks.
Freixe, who has been with Nestlé since 1986 and most recently served as CEO of the Latin America unit, will take over on September 1. His appointment is seen by many analysts as a return to Nestlé's traditional leadership style, with a focus on restoring investor confidence and reinforcing the company's position in the premium beverage market. Deutsche Bank analysts expect Freixe to prioritize top-line growth, with a renewed emphasis on organic expansion over mergers and acquisitions.
As Nestlé navigates this transition, the beverage industry will be closely watching how Freixe addresses the challenges inherited from Schneider, particularly the ongoing impact of the Perrier scandal and the need to realign the company’s portfolio with shifting consumer preferences.
