- Ulf Mark Schneider, Nestle's CEO, warned food and beverage companies are too focused on cutting costs they will undermine their growth prospects, according to Bloomberg. “Many companies are focusing on radical cost-cutting to deliver higher profits in the short-term,” Schneider said in his first appearance at Nestle’s annual shareholder meeting. “This approach is not sustainable.”
- Nestle is planning to expand its e-commerce platform, which has seen an increase of 20% recently.
- Schneider said the company would focus on efficiency and invest in its fastest-growing businesses in an effort to grow.
Nestle CEO Ulf Mark Schneider issued a strong message to shareholders this week when he said the company would not follow the drastic cost-cutting measures being used by other food and beverage businesses. Instead, the Switzerland-based company would grow by boosting investments and focusing on efficiencies.
Coming from the healthcare space where this strategy has been effective seems like a bold move, but it’s one that the company is buying into because Schneider believes cost-cutting is not the only solution.
While Kraft Heinz and AB InBev — two of the most notable companies trying drastic cost-cutting in an attempt to become more profitable—have gone this route, only time will tell if Schneider’s way is truly the answer. The concern from some analysts is that expenses can only be cut so much that at some point another acquisition is the only answer from which to squeeze out further growth through additional cost reductions.
Earlier this year, Schneider said Nestle was looking to restructure costs considerably, hinting at the company’s history of finding efficiencies when needed. At a time when the food industry is struggling to deal with changing consumer tastes and preferences, as well as the appearance of solid, nimble upstarts, spending more seems like a bold move, but one that could pay off big.