Nestlé again lowered its forecast for 2024 and reshaped its executive team on Thursday as the global food giant reported lower sales during the first nine months of the year.
The Swiss group, whose brands range from Nespresso coffee capsules to Purina dog food and Häagen-Dazs ice cream, said its sales amounted to 67.1 billion Swiss francs ($77.4 billion), down 2.4% from the same period last year.
“Consumer demand has weakened in recent months, and we expect the demand environment to remain weak,” Laurent Freix, Nestlé’s new CEO, said in a statement.
Nestlé appointed Frekes, who headed its Latin America unit, last month to replace Mark Schneider after sluggish sales and a series of product scandals.
Nestlé now expects organic sales, which exclude currency fluctuations and acquisitions, to grow by 2% this year, Frakes said.
The group had already lowered its annual sales growth forecast from 4% to 3% in July.
“An extremely painful reset for Nestlé, unprecedented in modern history,” said Jean-Philippe Bertschi, an analyst at Vontobel. “For a giant carrier like Nestlé, the loss in just a few months is enormous.”
Organic sales growth during the first nine months of the year reached 2%, compared to 7.8% during the same period in 2023.
“Consumer demand has declined,” Nestlé CFO Anna Manz highlighted during the earnings call. Temporary delistings in Europe, geopolitical tensions affecting consumer behavior and election anticipation in the US are among the factors weighing on the company.
The Swiss giant relied on promotions as a means to attract hesitant customers to buy more of its products after previously raising prices to compensate for high input costs.
Nestlé highlighted that in the third quarter, “confectionery and coffee price increases associated with higher input costs were partially offset by the impact of promotional activity in pet care and dairy products,” indicating that the company continues to face a mix of headwinds.
Nestlé announced several changes to its leadership structure, including merging its Latin America and North America divisions into a single unit in the Americas.
The Greater China region will become part of the Asia, Oceania and Africa region, among other changes that include the restructuring of the Executive Council.
“With these organizational changes, all key unit leaders driving our performance and transformation will report directly to me,” Frakes said.
“This is critical, as we sharpen our focus on consumers and customers, regain investment in our brands and innovate to expand our market share and accelerate our performance,” he added.