Nestle shares face pressure after sudden departure of CEO By Reuters

By John Revill

ZURICH (Reuters) – Nestle shares were expected to fall early on Friday after the sudden departure of CEO Mark Schneider from the world’s biggest food maker and his replacement by company veteran Laurent Freixe.

Schneider’s surprise exit was announced late Thursday after a board meeting that ended nearly eight years at the helm of the 58-year-old German, the company’s first outsider to lead Nestle in nearly a century .

Investors, whose confidence in Schneider had waned over the past 15 months, appeared rattled as shares in the maker of KitKat chocolate bars and Nescafe instant coffee were indicated nearly 3 percent lower in premarket activity in Zurich.

Freixe, a 62-year-old Frenchman, is seen as knowing the food industry inside and out, with a wide network inside and outside the Swiss giant.

Nestle is expected to focus on sales and marketing after the company followed rivals such as Danone and Unilever (LON:) in recent quarters.

Critics say Nestle relied too much on price increases, which hurt sales volumes as cash-strapped customers turned to cheaper brands.

A popular figure at Nestlé’s headquarters in Vevey, near Lake Geneva, Freixe has already started working in his new role, but knows it will take time to rebuild market share and increase sales volumes in a difficult market.

“There will always be challenges, but we have unmatched strengths,” he said. “We can strategically position Nestlé to lead and win wherever we operate.”

He is used to tough times, having led Nestlé’s European business in the wake of the global financial crisis before leading the business in America.

Most recently, he was Nestlé’s area head for Latin America, which has seen strong growth in recent years.

“With Laurent Freixe at the helm, the priority for Nestle will be to return to its roots, its fundamentals. He is a sales and marketing guy with a real passion for products,” said Jean-Philippe Bertschy, analyst at Bank Vontobel.

“If you look at the successful food companies of late, like Lindt and Danone, among others, they all have marketing and sales people as CEOs.”

Restoring sales growth will be vital to winning back investor confidence, Bertschy said.

After hitting an all-time high in January 2022 as Nestle enjoyed a pandemic-fueled boom, the company’s shares have fallen since May 2023 after a series of injuries, earnings misses and guidance downgrades.

Schneider drew praise for trying to shake up the firm, selling its US confectionery unit to Ferrero for $2.8 billion in 2018 and, three years later, several North American water brands to two private equity firms for $4.3 billion.

But his desire to turn around the food giant’s fortunes didn’t come fast enough for investors.

There were also missteps. Nestle paid $2 billion to take full ownership of a maker of peanut allergy treatments, but sold the business after three years, with analysts saying the company took a big loss.