Nestlé intends to maintain its Health Science unit, as stated by chairman Paul Bulcke in a recent interview addressing the leadership transition at the world’s largest food and beverage company.
Following the announcement last week that Mark Schneider will step down next month, analysts speculated about potential changes under the new CEO Laurent Freixe, a 40-year veteran of Nestlé and head of its Latin American division.
Some analysts had suggested that the Nestlé Health Science division could be subject to review by Freixe. However, in an interview with Swiss newspaper NZZ am Sonntag, Bulcke countered those speculations.
When asked if the unit would remain under its current structure, Bulcke confidently replied, “absolutely,” highlighting the promising nature of the field and its societal benefits.
Nestlé confirmed on Thursday (August 22) that Schneider would resign after nearly eight years at the helm.
In light of this news, analysts at Zurich Cantonal Bank (ZKB) noted that they wouldn’t be surprised if Nestlé Health Science is sold in the medium term.
Nestlé launched this division in 2011 to encompass products related to medical nutrition, pharmaceuticals, and active nutrition. The division promotes well-known brands such as Garden of Life vitamins and powders as well as Nature’s Bounty supplements.
In the company’s half-year financial results for 2024, reported last month, the Health Science unit generated sales of Sfr3.2 billion ($3.77 billion), experiencing organic growth of just 0.1% year-on-year. The report revealed that vitamins, minerals, and supplements had negative growth, primarily due to supply constraints experienced in the second half of 2023. However, the company stated that its recovery plan is on course, with the business gradually regaining market share. Notably, active nutrition saw low single-digit growth, bolstered by strong sales from Orgain, which helped to offset declines in the Boost brand.
Outlining his immediate objectives on Friday (August 23), the new CEO Freixe expressed the need for improved performance across the company. “Performance is okay, but I think it could be better. We need to raise our game there,” he emphasized.
Freixe, a seasoned Nestlé executive who will officially assume the role on September 1, identified gaining market share and enhancing execution as crucial priorities. He stressed the importance of engaging all levels of the organization and mobilizing staff effectively.
When discussing Nestlé’s recent financial results, Schneider had previously remarked on improvements in market shares across the portfolio. However, it was clear from the call that ongoing progress remains a pivotal concern for his successor. “My top priority is to drive sustainable top-line growth through market share gains,” Freixe asserted, adding that while he hopes to be gaining in core areas, he recognizes that consistent performance across all regions is vital.
Additionally, the company recently revised its anticipated organic growth forecast for 2024, narrowing it from “around” 4% to “at least” 3%. This adjustment came despite a rebound in underlying volumes during the second quarter. The Purina pet-food maker also lowered its earnings per share guidance from a growth forecast of 6-10% year-on-year to a mid-single-digit increase.
As the new leadership transitions at Nestlé, the food and beverage industry continues to reflect changes in consumer trends, market dynamics, and business strategies. Nestlé’s commitment to the Health Science unit underscores the company’s dedication to addressing growing health and wellness demands in the global food and drink market.
In conclusion, while challenges persist within the food and beverage sector, the strategic decisions made today will shape the industry landscape for years to come.
