Nestlé plans to focus on robust categories, like coffee and health science, to boost market leadership and unlock new growth opportunities across the Americas.
The company will concentrate its core business and resources on “best growth opportunities” while reconfiguring the supply chain for underperforming categories, like coffee creamers Nestlé CEO Laurent Freixe told analysts during the Consumer Analysts of New York meeting Feb. 21.
The company’s focus on high-growth categories is more than just expanding market share, explained Steve Presley, CEO, Nestlé Zone Americas. By doubling down on streamlined operations, the company ensures faster innovation and stronger productivity while maintaining a sharper and agile portfolio, he added. This includes moving from five zones to three – Americas, Europe and Asia, Oceania and Africa (AOA).
Investing in category ‘winners’
The company will prioritize its “winners,” like its coffee segment and brand stars like Kit Kat, by investing in “new geographies, new subcategories, new business models or innovations,” Freixe said. While Nestlé licenses Kit Kat to Hershey for sale in the US, the company sells the brand to other global markets.
For example, this year marks Kit Kat’s 90th anniversary and as one of Nestlé “fasting growing brand globally” in the confectionery category, “we have substantial runway ahead,” he explained.
To build on Kit Kat’s success, Nestlé is exploring “multi-sensorial experiences” by launching Kit Kat tablets in 29 countries across all three zones, and “bite-sized Kit Kat balls” in 19 countries, Freixe elaborated.
Nestlé is investing heavily in these launches by building a new production line in Europe and deploying a full marketing campaign, according to Freixe.
Freixe explained that Nestlé’s Kit Kat strategy reflects its priorities to build on what is already working for the company.
Nestlé also is investing heavily into its health and wellness segment, which contributed $2 billion sales and makes up 17% of its business. Freixe pointed to the company’s growing protein R&D expertise to develop “the highest protein concentration” in its products, in addition to addressing GLP-1 diets, malnutrition and athletic recovery.
Reconfiguring underperforming categories with supply chain refresh
While Nestlé is focused on its “big bets,” the company is evaluating how to boost sales for its underperforming sets, Freixe said. These include frozen pizza and coffee creamers in the US.
The primary challenge for coffee creamers is supply, forcing the company to “limit or stop promotions” and innovation in a competitive category, ultimately decreasing sales, he said.
To combat production and supply barriers, Nestlé opened its Glendale, Ariz., facility earlier this year for its most popular coffee products, including Coffee Mate Creamers and Starbucks-branded coffee.
While these products will take some time to show sales growth due to the once-a-year shelf resets, Freixe is confident that with the new facility and brand marketing, its coffee creamer business is “on the right path.”
