Nestle ramps up cost-cutting and plans to invest in brands

It said “work has already begun on key initiatives across procurement, commercial investments and structural costs” as it looks to ramp up cost-cutting.

The group’s bosses said at its capital markets day for investors that it did not anticipate significant restructuring.

Nestle has around 270,000 employees across the world.

Mr Freixe said the group will use the savings to help channel spending into advertising and marketing, with investment in those areas being increased by up to 9 per cent of sales by the end of 2025.

Nestle added that its water and premium drinks arm will become a separate global standalone business as of January 1 next year and its new management team will “evaluate the strategy for this business”, including possible partnership deals.

The firm – which makes a raft of well-known household brands including Nescafe coffee and Cheerios – maintained recently lowered sales guidance for 2024, but cut its profitability outlook for 2025, saying it was set to be “moderately lower” than the expected result for this year.

The consumer goods giant had already trimmed its sales outlook in July and October after weaker-than-expected sales.

Mr Freixe 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.

“Our action plan will also improve the way we operate, making us more efficient, responsive and agile.

“This will allow us to deliver value for all our stakeholders.

“I am confident that we can deliver superior, sustainable and profitable growth and gain market share, while transforming Nestle for long-term success.”

Nestle has been slowing down its price increases to help woo cost-conscious consumers.

It said in October it was increasing prices but by the slower pace of 1.6 per cent on average globally, down from 2 per cent in the first half, following “unprecedented increases in the prior two years” as it grappled with soaring inflation.

The sector has seen cocoa prices soar, putting pressure on confectionary firms to pass on costs to consumers.

Last month, Chris Beckett, head of equity research at Quilter Cheviot, said “Nestle remains a good company but it is going through a challenging period.

“The new chief executive is implementing quite a wide-ranging internal reorganisation to help get the business back on track."

Mr Freixe took on the top role in September when former boss Mark Schneider abruptly quit after several quarters of weak trading.

Last month, the new boss also announced a revamped leadership team and operations structure as he puts his stamp on the business.

The Nestlé York site employees around 2,000 staff, including apprentices, graduates and placement students, making it one of the largest private sector employers in the city of York.

Nestle’s presence in York dates from 1860 when the Rowntree family purchased land to build a factory.

Nestlé also has a large base in Halifax, West Yorkshire, which is home to Quality Street.