Nestle to boost advertising and marketing, cut costs by $2.8 bln by 2027
By Ralph Tathagata
Nestle, the world’s giant food company, says it will boost advertising and marketing to drive growth. It’s also cutting costs by at least $2.8 billion by 2027 and carving out its water and premium drinks businesses into a standalone global unit.
Nestle stated it will increase investment in advertising and marketing to 9% of total sales by 2025 to support growth.
It would be recalled that Laurent Freixe, Nestle’s new CEO and a 40-year veteran who took the reins in September, replaced ousted Mark Schneider who had disappointed investors for several quarters with weak sales volume growth. Under Schneider, Nestle gutted its marketing and advertising budget and invested less in innovation during the cost-heavy COVID-19 pandemic.
According to the company, advertising and marketing expenses in 2023 were 7.7% of sales, an increase of 80 basis points from the year before.
Responding to the idea that its portfolio of more than 2,000 brands needs to be cut down, CEO Freixe said he wants to “fix, rather than to sell, the majority of” its underperforming businesses.
Anna Manz, the company’s finance chief said, “We don’t have a portfolio problem,” adding that the company wants to invest in organic growth.
Nestle also said that it plans to carve out its water and premium beverages businesses into a global unit starting Jan. 1, 2025.
Freixe has said previously that he wants to invest heavily in the company’s core brands like Nescafe and Maggi, which makes soups, sauces and noodles.
“Our action plan will also improve the way we operate, making us more efficient, responsive and agile,” Freixe said in a statement. “This will allow us to deliver value for all our stakeholders.
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