Nestlé shares tumbled early on Friday following the abrupt departure of chief executive Mark Schneider announced late on Thursday.
Schneider’s departure was announced following a board meeting that put an end to the nearly eight-year tenure from the company’s first outsider to lead Nestlé in over a century.
Company veteran Laurent Freixe has replaced him.
Investor confidence in Schneider had waned over the last 15 months, though the announcement shocked investors with shares in the world’s biggest food maker falling by nearly 4% after trading started.
Freixe, a 62-year-old Frenchman with deep roots in Nestlé, has already started work in his new role, faced with the task of rebuilding market share and increasing sales volumes in a tough market.
‘Investing In Our Brands’
Nestlé has trailed behind rivals such as Danone and Unilever in recent quarters as consumers balked at the high price of branded products and turned to cheaper, private label alternatives.
The new CEO immediately pledged to focus the company on organic growth rather than acquisitions.
Freixe told analysts on Friday, “We want to gain market share, and that comes back to investing in our brands.
“That comes back to investing in our growth platforms.
“The focus will be on driving the current portfolio.
“Primarily organic growth is of the essence.
“On the portfolio there might be of course adjustment, but again top priority is absolutely organic growth.”
Challenges
Critics argued that Nestlé has been too reliant on price increases, which have hurt sales volumes in recent quarters.
Freixe is used to challenging times, having previously led Nestlé’s European business in the wake of the global financial crash before heading the business in America.
Most recently, he has been head of Nestlé’s Latin America zone, which has seen strong growth on his watch.
Jean-Philippe Bertschy, an analysts at Bank Vontobel, said, “With Laurent Freixe in charge, the priority for Nestlé will be to go back to its roots, its fundamentals.
“He’s a sales and marketing guy with a real passion for the products.
“If you look at successful food companies lately, like Lindt and Danone among others, they all have marketing and sales people as CEO.”
Bertschy added that restoring sales growth will be vital to winning the trust of investors.
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