Nestle SA will make its global waters and premium beverages activities into a standalone business on Jan. 1, 2025, as part of a multifaceted plan to improve growth and profitability under its new CEO.
In its Nov. 19 Capital Markets Day presentation to investors, Laurent Freixe, who took over as CEO on Sept. 1, said, “We will now invest further in our brands and growth platforms to unlock the full potential of our products for our consumers and our customers.”
Two other components of the plan are increased investment in advertising and marketing – “to be stepped up to 9% of sales by the end of 2025 to support growth.” And “cost savings of at least CHF 2.5 billion ($2.8 billion) above existing initiatives by end 2027 to fund increased investments.”
In the presentation, Nestlé officials confirmed 2024 guidance, with organic sales growth of around 2%, underlying trading operating profit margin of around 17% and underlying earnings per share broadly flat in constant currency. Looking ahead to 2025, Nestlé expects an improvement in organic sales growth compared to 2024, with the underlying trading operating profit margin anticipated to be moderately lower than the 2024 guidance.
In the medium term, organic growth is expected to be 4% plus in a normal operating environment, with an underlying trading operating profit margin of 17.0% plus.
Actions will include targeted investments in winning brands and growth platforms, more focused innovation activities to drive greater impact, and systematically addressing underperformers. “The necessary resources will be generated through cost savings and growth leverage,” a summary of the event said.
Nestlé also will accelerate its digital transformation to be a real time, end-to-end connected enterprise, powered by data and artificial intelligence. It is additionally ensuring that sustainability is embedded into its activities.
The standalone waters business, which includes such brands as Perrier and S.Pellegrino, will be led by Muriel Lienau, current head of Nestlé Waters Europe. “The new management will evaluate the strategy for this business. This will include exploring partnership opportunities to enable Nestlé's iconic brands and growth platforms to achieve their full potential.”
Nestle sold its waters business in the U.S. in early 2021 to One Rock Capital Partners and Metropoulos & Co., which renamed it Blue Triton. Brands include Pure Life, Poland Spring, Ice Mountain and Deer Park. And Blue Triton merged this past June with Primo Water Corp. and just over a week ago the merged company was renamed Primo Brands.