Nestlé: Regaining Market Confidence Requires Action

Analysis by Daniel Steck in Allnews.ch

As the Vevey-based giant navigates one of the most challenging periods in its recent history, a key question remains: how can it restore investor confidence and revive its faltering growth?

In an interview with Allnews.ch, Daniel Steck, Fund Manager and Analyst at Piguet Galland & Cie SA, discusses the group’s current challenges and the levers required for a genuine turnaround.

A major managerial turning point

The departure of Mark Schneider marks the end of an era. Under his leadership, a generous dividend policy and large-scale share buybacks certainly pleased shareholders — but at the cost of reduced investment in brands and innovation.

The result: stagnating revenues, rising debt, and a loss of agility in an industry undergoing rapid transformation.

Recent changes at the helm — notably the appointment of Pablo Isla, former CEO of Inditex, as external chairman — reflect a clear desire for change. The aim is to bring a fresh perspective and rebuild a culture of sustainable growth.

Rebuilding an image

Nestlé’s share price discount has reached its lowest point in five years, reflecting ongoing scepticism among investors.

Recent scandals — involving frozen pizzas and bottled water — have damaged the group’s reputation among both consumers and shareholders.

According to Daniel Steck, credibility can only be restored through decisive action: reviewing the portfolio, divesting from underperforming businesses, and suspending share buybacks in favour of productive investment.

Focusing on organic growth

While some growth drivers — such as coffee and pet food — remain strong, other strategic bets, particularly in plant-based products, are still fragile.

“Nestlé will need to reinvest in its brands, strengthen innovation, and return to organic growth,” emphasises Daniel Steck.

Targeted acquisitions, combined with clear communication about the group’s strategic priorities, could also help rebuild its image.

Long-term potential

Despite current turbulence, the group retains solid fundamentals: powerful global brands, a diversified geographical presence, and still-strong margins.

For long-term investors, this period of uncertainty could represent an attractive entry point — provided the new management can turn its promises into tangible results.

📖 Read the full interview on Allnews.ch