Nestlé's Strategic Reorientation amid Profit Declines
The Swiss conglomerate, Nestlé, is undergoing a significant strategic overhaul as it considers selling most of its vitamin and supplement businesses. This move comes after a 10% decline in net profits during the first half of 2025. Under the guidance of new CEO Laurent Freixe, the company aims to concentrate on its primary and more lucrative segments, such as coffee, pet foods, and traditional nutrition. This strategic pivot could result in a substantial divestment.
Maurice Quentin, the previous chief, expanded Nestlé's portfolio by acquiring Bountiful’s top vitamin brands in 2021 for $5.75 billion. However, Freixe’s recent steps, in light of poor financial performance, include exploring a sale of brands including Nature’s Bounty and Puritan’s Pride to streamline operations under more profitable arms. A 2.7 billion euro cost-cutting initiative is also underway.
Marketplace responses have been critical; Nestlé's stock fell 4.6% post-earnings release, totaling a 21% decrease over the past year. Despite potential divestitures, niche high-end brands like Garden of Life and Solgar from the vitamin segment may still hold strategic value for Nestlé. KPMG has been hired to manage the sale of the Spanish dietary company, PronoKal, purchased in 2022.
This realignment sends a clear message to the food and beverage industry, exemplifying the emphasis on profitability and optimized management amidst market volatility. It’s an indication of the ongoing competitive pressure within the industry.
