Swiss food conglomerate Nestle just welcomed its first outsider CEO in nearly a century, in hopes of reinvigorating its confectionery business, growing asset sales and bringing more of a focus on health-related categories. Ulf Mark Schneider, 51, a healthcare veteran, joined Nestle Jan. 1. Schneider was previously chief executive of German health-care company Fresenius for 13 years. Reports say he helped triple revenue and net income at Fresenius through acquisitions, and helped build the European company into a global leader in dialysis products and services. Schneider also focused on growing Fresenius' North American business, buying dialysis clinics and urgent care centers as well as swallowing a large generic drugmaker.
Schneider's hiring by the packaged food company's board earlier this year makes it clear to investors the board wants change. While some analysts are surprised the board didn't vie for a consumer packaged goods CEO, others are encouraged. Nestle, Vevey, Switzerland, is the world's biggest food company from a revenue standpoint, though its 2016 sales forecast might have been one of its its worst in terms of organic sales growth in more than a decade.
Besides its chocolate and confectionery businesses, Nestle sells baby food, dairy products, coffee, frozen pizza and pet food. The Nestle Health Science Division also is active in food and nutrition products aimed at patients with diabetes, obesity and Alzheimer's.
Nestle stated in June that Schneider would replace Paul Bulcke as CEO. Bulcke began his career with Nestle in 1979 and is slated to become chairman. The last time Nestle brought in an outsider to fill the CEO slot was in 1922.
A multinational company, with brands ranging from KitKat candy bars to Dreyer's ice cream, Nestle has realized challenges of late in the confectionery and snack space from shifting consumer preferences away from sugar-containing snacks and confections to more health-conscious foods. Disruptive brands of smaller food and beverage companies have also impacted sales with nimble and effective responses to new trends.
With approximately 2,000 brands worldwide, Nestle could visualize a major makeover under Schneider, with purchases in wellness and health-based products. Nestle owns a 23-percent stake in French cosmetics giant L'Oreal, valued in excess of $20 billion. The sale of that stake could fuel and fund acquisitions. Schneider knows the health business very well. Mergers and acquisitions are more likely to be in the health area in the future.
Analyst reports are forecasting Nestle's organic top-line growth (a key metric of company performance) could rise 3.5 percent in 2016, a deceleration from the 4.2 percent in 2014, which would make it the slowest organic sales growth in more than a decade. It's likely that Schneider will take measures to address the company's under-performing confectionery business, which accounts for around 10 percent of total sales, as well as cultivate the healthy foods and health products business segments.
