For the average consumer goods giant, life is sadly lacking in spice. The pandemic-era bubble has dissipated, taking volume growth with it. Product prices have been raised about as far as consumers can stand. To deliver even halfway-decent sales growth, companies need to pour money into marketing — and keep wielding the axe even to maintain margins.
That is an apt description of Nestlé’s daily grind. In his maiden capital markets day, new boss Laurent Freixe has ditched almost every target the Swiss group — maker of Nescafé coffee, KitKat bars and Maggi stock cubes — had previously set. Nestlé will also turn its water business into a standalone unit, a possible prelude to the sort of slimming down that Reckitt and Unilever have been engaged in. This is all perfectly sensible but, given Nestlé’s much-reduced prospects, will come as cold comfort to its investors.
Medium-term sales growth has been cut to 4 per cent plus, down from a mid-single-digit target set in 2022. That already baked in a decline compared with the 8.4 per cent achieved that year. Even that reduced level does not look easily achievable given Nestlé’s 2024 sales growth guidance — after two cuts — has fallen to 2 per cent.