No mercy for Nestlé CEO Mark Schneider
That the boardroom is a jungle, may be a cliché, but for Nestlé top, Mark Schneider, it became a reality last week. The board chose to replace him with veteran Laurent Freixe.
That put an end to a nearly eight-year tenure at the helm by the 58-year-old German, the first company outsider to lead Nestlé in nearly a century.
Nestlé has a long tradition of recruiting top managers internally within the company and Schneider was the exception, but now it is over for him too.
It could be interesting to see if Laruent Freixe gets more momentum in the company, which in practice will probably mean the share prices.
No details
Nestlé declined (of course) to give further details beyond comments made on an investor call last Friday, where Chair Paul Bulcke said the board together with Schneider had assessed the current environment and together had agreed to make the change.
However Schneider had made it clear recently he expected to be around for the long haul, Bernstein analyst Bruno Monteyne says to Reuters.
"The suddenness of the move is another sign that this is not a planned transition. It is clearly not his choice either, or he probably would have managed a smoother transition," he says.
The 58-year-old German moved the Swiss firm away from its decades-old category-led structure in the wake of the COVID-19 pandemic, when the company enjoyed a boom as people bought its food and drinks to eat at home during lockdowns. It seemed smart, but Nestlé has struggled recently, last month cutting its full-year sales outlook, and saying it had to slow its price hikes as cash-strapped customers became more price conscious.
Downward trajectory
Under Schneider's leadership, Nestlé's shares hit their highest level in January 2022, before hitting a downward trajectory since May 2023. The executive appeared to lose investor confidence, as the maker of KitKat chocolate bars and Nescafe instant coffee sharply underperformed rivals like Unilever.
Where Unilever, Danone in recent quarters been able to lower some product prices and drive sales volumes, Nestlé has struggled to regain shopper loyalty that it lost in price hikes it had to make after the pandemic and Russia's invasion of Ukraine.
Core activities
When asked how his strategy would differ from Schneider's, Freixe told journalists that Nestlé, a company with more than 2,000 brands, spanning dog food to water and infant nutrition - would focus on its "core" activities.
"I will put a lot of focus on the core. I will not exclude, of course, mergers and acquisitions," Freixe said. "But...the big message is focus on the core."
Freixe, whose new role will be effective on 1 September, joined the company in France in 1986, going on to lead Nestlé's European business during the 2008 financial crisis. He then headed Nestlé's Americas unit and eventually led the Latin America business from 2022 where he oversaw rapid growth in recent years. He was an unsuccessful contender for the CEO post in 2016, said Jefferies analyst David Hayes.
"After an increasingly difficult year, it's not a total surprise to see a CEO change," said Hayes.
Popular
The 62-year-old Freixe, a popular figure at Nestlé's HQ in Vevey, next to Lake Geneva, has already started work in his new role, but knows it will take time to rebuild market share and increase sales volumes in a tough market.
"There will always be challenges, but we have unparalleled strengths," he said. "We can strategically position Nestlé to lead and win everywhere we operate."
Chair Paul Bulcke said Nestlé had not considered an outside candidate before choosing Freixe.
"Having Laurent, there was no need to look outside," Bulcke says.
"He's a sales and marketing guy with a real passion for the products," says Jean-Philippe Bertschy at Bank Vontobel.
"If you look at successful food companies lately, like Lindt and Danone among others, they all have marketing and salespeople as CEO."
In comparison, the Orkla boss, Nils K. Selte, is a financier with limited experience in sales and products. Incidentally, Nestlé has bid for Orkla several times. Whether it is still relevant is not known, but we think it is quite likely. We know they talk to each other from time to time.
Sources: Nestlé, Reuters, FT.
Images from Nestlé's Flickr account shared with Creative Commons license CC BY-NC-SA 2.0