Summary
- The leadership is set to outline strategy for restoring competitiveness and sharpening the company’s operational focus.
- Nestlé is working to manage prices in key categories like coffee and confectionery to protect volumes and support consumer sentiment.
- Investors are likely to raise questions about the Waters business, the financial impact of the infant formula recall, and the company’s longer‑term approach to GLP‑1‑driven demand shifts.
- Nestlé plans to push an innovation strategy built around multi‑year platforms, with cold coffee and upgraded confectionery concepts positioned as key growth levers.
In the past 12 months, Nestlé has weathered a CEO reshuffle, won a water filtration court battle, set out an efficiency drive, and continues to grapple with a global infant formula recall.
On the eve of the Swiss major’s fiscal year results, we look at the main talking points ahead of its presentation on February 19, 2026.
The impact of the infant formula recall
Nestlé has played down fears that the infant formula recall – which has seen the CPG major recall products from around 60 countries globally – would make a major dent on its financials.
The company says that the recalled products form less than 0.5% of its sales – but some brokers have been less optimistic. Jefferies estimates losses of around CHF1.3bn (around 1.3% of sales) while Barclays forecasts CHF 1 billion.
Investors will inevitably ask how the Swiss major has arrived at its estimate and whether it’s changed now that additional recalls were triggered earlier this month.
Questions are also likely to arise about stocking levels and the potential long‑term impact on shelf share.
The potential sale of Waters
Nestlé is looking to optimise its portfolio and investors would be keen to know where that leaves the company’s Waters business.
A year ago, former CEO Laurent Freixe told investors the company was “working on the next phase and building up those partnership opportunities” and that it remained committed to the category.
In recent months, a partial sale of Waters has been touted once again, with Deutsche Bank, Bain and Company and others reportedly circling the assets.
Nestlé set up Waters as a globally managed unit in late 2024 and has been looking to enter a partnership with another player to support the business’ future growth. The category is exposed to tariff headwinds and with Nestlé keen to streamline its portfolio, plans to sell up to 50% of the business are now gathering pace.
Waters is the third biggest sales contributor for the Swiss major after Beverages and Confectionery.
Managing price pressures
CEO Philipp Navratil is likely to underline the strategic importance of coffee and confectionery in the portfolio but also outline a strategy geared towards restoring competitiveness.
High prices in these categories have put strain on consumer sentiment as the Swiss major sought to offset input costs in recent years.
But with cocoa and coffee prices trending lower, the company has been optimising prices during fiscal 2025 to prevent volume losses – especially in confectionery where consumers have been more likely to trade down – and this action is expected to continue to support consumer sentiment and the goal of a positive volume-mix in the next fiscal year.
Avoiding a negative impact on performance while doing so will be critical, however.
Maintaining momentum in coffee and confectionery
Coffee and confectionery were the two largest contributors to organic growth at group level for Nestlé in the first nine months of FY25, making the categories its biggest growth engines.
Coffee has been the more resilient of the two categories, with sales continuing to grow even after price increases, while confectionery sales have also improved despite pull-back from consumers due to price increases.
CEO Philipp Navratil explained the company would shift from a strategy based around individual product launches to building multi-year innovation platforms.
Cold coffee will be a key growth lever in the category with innovation spanning espresso concentrate, RTD and cold recipes set to be rolled out across its other major brands ie Starbucks and Nespresso.
Confectionery is also likely to follow this strategic approach along with improvements in pack architecture, taste and innovation such as its Chocobakery line that combines confectionery and bakery elements.
Outlining the operational efficiency strategy
In its nine-month update, Nestlé’s leadership said it would tackle 18 underperforming business cells as it looks to accelerate growth.
With Navratil set to outline guidance for 2026 and the mid-term, the chief executive is likely to get more specific about which business units the company will zero in on for improvement.
Investors would also be keen to find out how marketing spend, outlined as a crucial growth lever, would be ramped up this year.
Strategy on GLP-1s
Nestlé was an early entrant in the GLP-1-friendly food and beverage realm, and its Vital Pursuit range has reportedly been a hit with health-conscious consumers.
But the CPG major would likely need to demonstrate a long-term vision to appease investors, given that weight loss drugs put up to net 40% of sales at risk, according to broker Jefferies.
Would Nestlé sell its L’Oréal stake?
Nestlé’s 20% stake in L’Oréal may also be a talking point, specifically in the context of a potential sale.
The stake contributes substantially to Nestlé’s market cap valuation, making it of strategic importance to the Swiss major.
A sale could support Nestle’s need for balance sheet flexibility in line with its mid-term cash generation and dividend commitment.
