Advertising and marketing expenses will be increased to 9% of sales by the end of next year, in order to support the growth of the Veveysan group.
Food giant Nestlé wants to tighten its belt, forecasting savings of at least 2.5 billion francs by the end of 2027, in addition to previous cost reduction initiatives. Activities in high-end waters and drinks will be autonomous.
“Nestlé is a solid company,” declared Laurent Freixe, general manager of the producer of Nespresso coffee capsules, San Pellegrino mineral water and Kitkat chocolate bars. According to the French manager, who took control of the group at the beginning of September, replacing Mark Schneider, the company has “a diversified and strategically well-placed product portfolio”.
“We will invest more in our brands and our growth pillars in order to exploit the full potential of our products”, allowing the multinational to “achieve superior, sustainable and profitable growth and gain market share”, underlined the boss Tuesday in a press release published ahead of his investor day.
Concretely, advertising and marketing expenses will be increased by up to 9% of sales by the end of next year, in order to support growth. “The necessary resources will be generated through cost savings and growth leverage,” the company detailed.
As part of its reorganization, the multinational decided to automate its activities in high-end waters (San Pellegrino, Perrier, Acqua Panna, Nestlé Purelife) and drinks (Nesquik, Nestea, Milo, Nescafé). Muriel Lienau, who heads the Nestlé Waters unit in Europe, will be responsible from the start of 2025.
“This will include exploring partnership opportunities to enable Nestlé’s iconic brands and growth pillars to reach their full potential,” detailed Nestlé.
On the financial side, Nestlé confirmed that it anticipates organic sales growth of around 2% for the current financial year. At the end of July, the group lowered this objective to “at least 3%”, compared to 4% previously. The recurring operating margin should rise to around 17.0%, compared to 17.3% in 2023, while recurring earnings per share should remain stable over one year.
In 2025, the group expects an improvement in organic growth, accompanied by a “moderate” decline in operational profitability.
In the medium term, the company targets organic revenue of at least 4% and an underlying operating margin of at least 17%.
