Milling & Baking News Corporate Profiles - 2017 - 110

Company Overview

Nestle S.A.
Reformulating recipe for long-term growth

ollowing a comprehensive review of
its operations earlier this year, Vevey,
Switzerland-based Nestle S.A. said it
will focus its capital spending on advancing
high-growth categories such as coffee, pet
care, infant nutrition and bottled water. The
company also plans to expand its presence in
high-growth geographic markets and to pursue
growth opportunities in consumer health care.
Nestle said it only will prioritize external growth
opportunities that fit within targeted categories
and geographies, deliver attractive returns, and
build on the company's leadership position in fastgrowing food and beverage segments.
The company also shared plans to explore
strategic options for its U.S. confectionery
business, which includes such brands as Butterfinger, Baby Ruth, Skinny Cow, Raisinets and
others, and generates approximately $922 million in annual revenues. The company said it
remains committed to growing its international
confectionery business around the world, particularly the global KitKat brand.
That decision, Nestle said, is consistent with
its overall approach, and the company indicated it plans to continue to adjust its portfolio in
line with its strategy and growth objectives.
"We will need to trade out of some product areas and into others," said Mark Schneider, chief

Chief executive officer -
Mark Schneider

110 \ October 2017

executive officer, in a Sept. 26 investor seminar.
These changes come as the company faces
soft consumer demand and a challenging retail
environment in North America. As a result, organic
sales growth for the first half of fiscal 2017 came
in below expectations, executives said in July. In
the United States, Nestle had flat growth in the
first half.
Meanwhile, the company has continued in
its efforts to reformulate iconic brands in its
portfolio with an eye toward health and wellness. The company set out to decrease sugars,
sodium and saturated fat. By the end of 2016,
Nestle said it had reduced its added sugar content by 8%, reduced sodium content by 10.5%
and reduced saturated fat content by 6.5%.
Nestle also identified a need to increase
vegetables, fiber-rich grains, pulses, nuts and
seeds in its food and beverage products.
By 2020, Nestle said it plans to add at least
750 million portions of vegetables and 300 million portions of nutrient-rich grains, pulses and
bran, and more nuts and seeds, to its products.
The company said it also intends to pack as
much fiber as possible from whole grains into
its ready-to-eat cereals.
The company's commitment to simplify its ingredient lists and remove artificial colors will be
achieved through the implementation of a "Kitchen
Cupboard" approach, Nestle said. The "Kitchen
Cupboard" approach focuses on using familiar and
recognizable ingredients, such as vegetables, spices, herbs and flours. By 2020 the company hopes
to remove all artificial colors from its products and
continue to remove unfamiliar ingredients.
During the year, the company began a transition of its Nestle USA headquarters to Arlington
County, Va., from Glendale, Calif. The move signals Nestle's commitment to future investment
and growth in the United States, Nestle said.
"With the food and beverage landscape continuing to transform at a rapid pace, Nestle has
been innovating and making strategic changes to
the business over the past five years," said Paul
Grimwood, chairman and chief executive officer
of Nestle USA. "This move is the next step in our
evolution." CP

Nestle S.A.
net profit

in millions of Swiss francs

2016

2015

8,531

9,066

14,456

2014

Nestle S.A.
net sales

in millions of Swiss francs
2016

2015

89,469

88,785

91,612

2014

Nestle S.A.
share price

per share in Swiss francs
90

60
Sept. Dec. Mar. June Sept.
2016
2017

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