Nestle Shakes Up Leadership: Veteran Freixe Replaces Ousted CEO Schneider

Zurich and London - Nestle, the world's largest food and beverage company, has parted ways with its CEO, Mark Schneider, in a sudden move attributed to the group's recent underperformance. This decision, announced late Thursday following a board meeting, brings an end to Schneider's near eight-year tenure, during which he became the first outsider to lead Nestle in almost a century.

Laurent Freixe, a seasoned Nestle veteran, has been appointed as the new CEO. Freixe, a French national, has served Nestle for almost 40 years, holding key roles across various regions and departments. His appointment marks a shift towards a more traditional approach within the company, with a focus on organic growth rather than acquisitions.

The decision to oust Schneider comes after a period of declining stock performance and a series of missteps. While Nestle enjoyed a pandemic-driven boom, reaching record highs in January 2022, its shares have been on a downward trajectory since May 2023, following earnings misses and guidance revisions. The share price fell by 1.8% on Friday, highlighting investor uncertainty surrounding the unexpected leadership change.

Analysts cited several factors contributing to the share price drop, including concerns about Nestle's ability to meet its 2024 and 2025 targets, and the possibility of a reduced profit guidance under the new CEO, who may prioritise sales growth over margins.

"We like the fact the incoming CEO is from a longstanding traditional Nestle background and think more restrictive approach to capital allocation will do well for the business in the medium term," said Freddie Lait, managing partner at Latitude Investment Management, adding that his firm no longer holds Nestle shares.

Freixe, known for his extensive network within the food industry, is expected to strengthen Nestle's focus on sales and marketing, an area where the company has lagged behind rivals such as Danone and Unilever. Nestle's share performance in 2024 has been lacklustre, trailing both Danone and Unilever.

Industry experts have attributed Nestle's recent challenges to a reliance on price increases, which have negatively impacted sales volumes as consumers, facing economic pressures, have switched to more affordable brands.

Freixe faces a significant challenge in rebuilding market share and boosting sales volumes in a competitive environment. He has pledged to leverage Nestle's strengths and "strategically position Nestle to lead and win everywhere we operate."

Jean-Philippe Bertschy, an analyst at Bank Vontobel, believes Freixe's priority should be to return to Nestle's roots, emphasizing market understanding, strong brands, and a deep connection with customer needs and preferences.

"If you look at successful food companies lately, like Lindt and Danone among others, they all have marketing and sales people as CEO," he said, highlighting the importance of a sales and marketing-focused leadership in the current market.

As Freixe takes the helm, Nestle embarks on a new chapter, seeking to regain its former dominance in the competitive food and beverage industry. Whether the new leadership can deliver on its promises and restore investor confidence remains to be seen.