Dive Brief:
- Nestle chairman Peter Brabeck confirmed that current Nestle CEO Paul Bulcke is among the handful of candidates chosen to be Brabeck's potential successor when he retires next year.
- Nestle declined to comment on its official plans, but the company has often promoted from within, which analysts anticipate could be the case here, Reuters reported.
- CEO frontrunners include Laurent Freixe, who was named executive vice president and head of Nestle's Zone Americas in October 2014, and Wan Ling Martello, former CFO who became EVP and head of the Asia, Oceania, and Africa division last year, Kepler Cheuvreux analyst Jon Cox told Reuters.
Dive Insight:
Nestle has missed sales growth targets for the last three years. Nestle beat analysts' sales growth expectations in the latest reported quarter, but the 3.9% growth rate was well below the 5% to 6% target Nestle has maintained. To offset investor concerns, Nestle recently announced a $2.5 billion cost-cutting plan and initiatives to expand its online presence through partnerships with technology companies.
Considering Nestle's history of promoting internally Bulcke has a clear path to the chairman's position, with his CEO role potentially being filled by another regional director within the company.
These executives are intimately familiar with Nestle and its history, current initiatives, and plans for the future. That also means maintaining continuity despite the loss of Brabeck, who has been chairman since 2005 but must retire next year when he reaches 72.
Hiring an external candidate would be a break from tradition. But if the company wants to remain relevant as other competitors expand internationally or slim down to boost profitability, then an outside candidate might be considered.