Nestlé Group Launches "Sell, Sell, Sell": Premium Beverages and Ice Cream Businesses to Be Put on the "Shelf," CEO Says Will Focus on Four Main Areas

After experiencing frequent executive changes in 2025, the international food giant Nestlé Group is set to initiate several major business adjustments again.

On February 19, Nestlé Group disclosed its 2025 financial report. In 2025, Nestlé achieved sales of 89.49 billion Swiss francs, a slight decrease of 2% year-over-year, and a net profit of 9.033 billion Swiss francs, down 17% year-over-year.

The “Daily Economic News” reporter noted that Nestlé emphasized in its financial report that the group’s overall performance has improved, but the organic growth rate in Greater China continues to decline, mainly due to adjustments in business models. Additionally, the infant formula recall initiated in several countries and regions worldwide in January also impacted Nestlé’s performance in 2025. According to CEO Mark Schneider during the February 19 earnings call, the recall work has been fully completed, and the group’s focus has shifted to replenishing inventory.

Furthermore, on the 19th, Nestlé announced progress on three business adjustments involving the integration of nutrition and Nestlé Health Science, and the sale of ice cream, water, and premium beverage businesses.

The infant formula recall has been completed

The global market continues to recover, but the Greater China market still faces challenges, which remains the main theme of Nestlé’s 2025 performance.

In 2025, Nestlé’s organic growth rate was 3.5%, with all regions and global businesses achieving positive internal growth rates. However, the organic growth rate in Greater China began to decline in the first half of 2025, with a full-year decline of 6.4%, including an actual internal growth rate of -4.5% and a pricing contribution rate of -1.9%.

“Despite adjusting channel inventories and reshaping operational models in Greater China, sales still declined. The organic growth rate in Greater China in Q4 2025 was -7.0%, affected by channel inventory adjustments, but it improved compared to the previous two quarters,” Nestlé stated.

“China is continuing to advance its business model adjustments, which affected growth for most of 2025. We expect these impacts to gradually ease by the second half of 2026,” said Group CFO Anna Mazz. The “business model adjustment” she referred to involves shifting from a distribution-driven approach to one centered on pulling consumer demand, a strategic change mentioned by Nestlé executives during the Q2 2025 earnings call.

Schneider responded to analyst questions during the earnings call, saying that the China team is implementing various adjustments. These include gradually reducing channel inventories, rebuilding capabilities—including marketing, innovation, and channel restructuring—and regaining the trust of distributors.

Another significant factor affecting Nestlé’s 2025 performance was the global recall of infant formula. In January, Nestlé launched a preventive recall of certain batches of infant formula in dozens of countries and regions, including China.

Image source: Nestlé official website

Mazz admitted that the recall mainly occurred in January 2026 but involved products sold in 2025. This impact led to an adjusted operating profit decrease of 75 million Swiss francs and an almost 10 basis point decline in adjusted operating profit margin. “In Q1 2026, customer returns and inventory shortages will have a one-time impact on sales, estimated at about 200 million Swiss francs.”

During the earnings call, Schneider also reviewed the causes and latest results of the recall. He stated that the company’s recall work has now been fully completed, with a focus on replenishing inventory. The company has engaged alternative raw material suppliers, resumed full-capacity production at factories, and implemented comprehensive testing before, during, and after production. Product supply has basically recovered, and all markets are expected to fully replenish inventories within the coming weeks.

Continuing the sale of ice cream business

For an international fast-moving consumer goods giant like Nestlé, complex product lines and cross-border, cross-regional personnel management pose certain operational challenges. To address this, Schneider, who took office in Q3 2025, proposed establishing a performance-oriented mindset and plans to cut approximately 16,000 jobs worldwide over the next two years.

During the February 19 earnings call, Schneider reiterated the importance of a performance-driven culture. He also mentioned that Nestlé will focus its product portfolio on four main businesses—coffee, pet care, nutrition, and food and snacks—with the top three accounting for 70% of sales.

“The main purpose of these adjustments is to make market operations clearer. Business execution and profit and loss ownership are clearly assigned to regional markets, while the headquarters focuses on truly global initiatives,” Schneider explained during the earnings call.

Image source: Nestlé official website

To further focus on core businesses, Nestlé announced three business adjustment plans on the day of the financial report release: first, integrating the nutrition and Nestlé Health Science units, the latter currently being directly managed by the group. With the restructuring, the global direct management structure of Nestlé Health Science will be abolished.

Second, Nestlé is engaging in in-depth negotiations with Froneri to sell its remaining ice cream business. Froneri is the world’s second-largest ice cream manufacturer, with a market share second only to the recently spun-off and listed Magnum ice cream company from Unilever. “Although this business performs well, its scale is relatively small and it disperses our core development efforts. Since the business aligns closely with Froneri, we have reached an agreement to sell it in phases,” Schneider said.

In fact, divesting the ice cream business is part of Nestlé’s strategy to focus on food and snacks. Schneider stated that the group will promote innovation and synergy within this segment, leveraging current consumer trends such as “less eating more often” and portable consumption to guide innovation. The company will also further streamline its brands.

Additionally, for Nestlé Water and premium beverages, the group plans to initiate formal discussions with potential partners in Q1 2026, with the aim of divesting this business starting from 2027.

Will Nestlé sell other assets in the future? “We are continuously reviewing our asset portfolio and will regularly evaluate it. Last year, we completed ten small transactions,” Schneider responded.

Daily Economic News