CEO Mark Schneider replaced

Suddenly, things happened very quickly: Mark Schneider, who was once brought to the top of Nestlé as a beacon of hope, has left the company. The German will be replaced by Frenchman Laurent Freixe. This should have an immediate impact on the world’s largest food company.

Schneider’s earnings performance was met with disapproval amid weak share prices. Nestle announced after the market closed on Thursday that the quick exchange between the CEOs was still surprising.

A veteran took over

Freixe was previously in charge of Nestlé’s Latin American business. But this should not obscure the fact that he previously had greater responsibility at the company. He has been a member of the Executive Board since 2008 and was head of the most important Americas region, when Nestlé North and South America were still jointly managed by one manager. He also led the second most important region: Europe.

The new CEO is a Nestlé veteran who has been with the company for nearly 40 years. He rose steadily through the ranks in marketing roles in France, a long-standing Nestlé practice.

That’s what distinguishes him from Mark Schneider, who joined Nestle as an outsider from German healthcare group Fresenius in 2017 and quickly won praise from investors for his measures.

Schneider not only made friends on the inside, he also took a close look at privilege and networking in management.

Cleaning up the portfolio

Schneider has divested or outsourced several areas and is sharpening its focus as a company.

For example, under his leadership, the struggling bottled water business in the US was sold, and in water he mainly stuck to premium products like San Pellegrino. Similarly with chocolate: he sold the US candy business to Ferrero.

Our goal has always been to develop a healthier and more profitable product line. The plant-based meat substitute product business is also favored by the boss.

This is a big deal for Schneider Agreement reached with coffee chain StarbucksNestlé purchased the rights to the brand for more than $7 billion so that it can use it in its capsule business and coffee bean sales in the future.

Schneider has also repeatedly outsourced certain areas to joint ventures, such as its U.S. ice cream business. Fronelli Joint VentureHe also outsourced German meat company Herta and frozen pizza in Europe to a joint venture. The advantage of these structures is that Nestlé no longer has to run the factories because the partners take over.

Key Research

The changes initiated by Schneider at Nestle also included saving money and restructuring large research departments, including those in Switzerland. Under Schneider’s request, they should work more pragmatically and deliver visible results faster. But apparently they did not come fast enough.

One of the moves Schneider has won applause for is cleaning up the troubled skincare unit, Nestle Skin Health, which he sold during his tenure. The company is now ironically named Galderma becomes a beacon of hope for the stock market Gilded.

However, investor enthusiasm for Schneider has waned recently, and the share price has come under great pressure. The group recently disappointed with its half-year figures. When growth falls short of expectations.

In an interview in the spring, Schneider was convinced that the tide had turned at Nestlé. If that was the case, he could no longer reign supreme.

Health Failure

But there have been disappointments before: Hopes in the health division, for example, didn’t materialize. Nestle’s health science unit, which acquired companies in the nutritional supplement space, also suffered major setbacks. The company had an expensive failure with a drug to treat peanut allergies that ultimately led to a multibillion-dollar write-off.

Perhaps Schneider’s downfall was that after all the focus measures in his first few years in office, everyone stopped this We were waiting for that one big breakthrough that would change the company forever. But that one never came.

The problem for a company the size of Nestlé is that even a multibillion-dollar acquisition will only change the bottom line in the short term — no matter how promising or lucrative it may be.

There are also concerns about the near-term outlook for the business. Nestle had to revise down its forecasts at the end of the first half of this year. One reason for the concerns is the headwinds currently facing manufacturers of branded products.

Consumers are tired of price increases

Especially in the important U.S. market, consumers are less willing to accept further price increases the longer they use their products. Many are turning to retailers’ own cheaper brands. That’s bad news for companies like Nestlé.

Democratic presidential candidate Kamala Harris alluded to these concerns when she announced she would take action against “usurious” food prices. If Harris wins, life for Big Food may not get any better.

The statement quoted board chairman Paul Bulcke as saying that new CEO Laurent Freixe had “proven his ability to deliver results in difficult market conditions.” And: “Laurent is exactly the manager Nestlé needs now” – suggesting that the board does not believe Schneider can turn things around.

Bourque praised his successor, Schneider, for his “outstanding and consistent leadership during turbulent times”. The only specific thing the Nestlé president said was that he had made a significant contribution to the huge progress on the sustainability agenda, while also making it clear that from his perspective, there was nothing worth highlighting about the Schneider era from a business perspective.