Nestle, the global food industry leader, has announced plans to ramp up advertising and marketing efforts while cutting costs by $2.8 billion by 2027. Part of the strategy includes creating a separate global division for its water and premium drinks businesses.
The company aims to increase its investment in advertising and marketing to 9% of total sales by 2025, as a key move to drive growth. In 2023, marketing expenses accounted for 7.7% of sales, an 80 basis-point rise compared to the previous year.
This shift in strategy comes under the leadership of Laurent Freixe, Nestle’s new CEO, who took over in September. Freixe, a 40-year veteran of the company, replaced former CEO Mark Schneider, who faced criticism from investors due to disappointing sales volumes. Under Schneider, marketing budgets were significantly reduced, and there was less emphasis on innovation during the COVID-19 pandemic.
Addressing concerns about the company’s extensive brand portfolio, Freixe expressed his intention to “fix, rather than sell,” many of Nestle’s underperforming brands. Chief Financial Officer Anna Manz supported this approach, stating, “We don’t have a portfolio problem,” and highlighting the company’s focus on organic growth.
Nestle has also confirmed plans to establish a separate global unit for its water and premium beverages businesses by January 1, 2025. Freixe emphasized the importance of strengthening core brands like Nescafe and Maggi, which produce a range of soups, sauces, and noodles.
“Our action plan will enhance our efficiency, responsiveness, and agility,” Freixe stated. “This will enable us to deliver greater value to all our stakeholders.”
