Nestlé Shares Plunge as CEO Mark Schneider Abruptly Departs

Shares in Nestlé, the world’s largest food manufacturer, plummeted on Friday morning following the unexpected resignation of CEO Mark Schneider.

 

The 58-year-old German executive, who had served as the first outsider to lead Nestlé in nearly a century, announced his departure late on Thursday after a critical board meeting. This sudden leadership change has left investors uneasy, resulting in a nearly 4% drop in the company’s share price when trading commenced.

 

Schneider’s exit marks the end of a nearly eight-year tenure at the helm of Nestlé, during which he spearheaded several significant changes. However, the last 15 months saw investor confidence in Schneider wane, leading to growing dissatisfaction among shareholders.

 

His departure paves the way for Laurent Freixe, a 62-year-old Frenchman with a long history at Nestlé, to take the reins. Freixe’s immediate challenge will be to reverse the recent declines in market share and to reignite growth in what has become an increasingly competitive landscape.

 

Nestlé has lagged behind key competitors such as Danone and Unilever recently. Upon assuming his new role, Freixe made it clear that his focus would be on organic growth rather than pursuing acquisitions. Speaking to analysts he emphasised the importance of investing in Nestlé’s existing brands and growth platforms to regain lost ground.

 

“We are determined to gain market share,” Freixe said. “This means prioritising organic growth. While there may be some portfolio adjustments, our top priority remains organic expansion.”

 

Freixe faces a tough challenge as critics argue that Nestlé has relied too heavily on price increases, which have alienated cash-strapped consumers who are turning to more affordable alternatives. The new CEO, however, brings a wealth of experience to the role, having successfully navigated Nestlé’s European business through the aftermath of the global financial crisis before leading the company’s operations in the Americas. Most recently, he has overseen the Latin American division, which has thrived under his leadership.

 

Jean-Philippe Bertschy, an analyst at Bank Vontobel, said that Freixe’s deep-rooted expertise in sales and marketing could be exactly what Nestlé needs to return to its core strengths.

 

“With Laurent Freixe in charge, Nestlé is likely to refocus on its fundamentals,” Bertschy said. “He’s a sales and marketing expert with a genuine passion for the products. If you look at successful food companies recently, like Lindt and Danone, they all have CEOs with a strong background in marketing and sales.”

 

Restoring sales growth will be crucial for Freixe as he seeks to win back the trust of investors. Nestlé’s shares reached an all-time high in January 2022, buoyed by a pandemic-driven surge, but have been in decline since May 2023 following a series of setbacks, including earnings misses and downgraded guidance.

 

Schneider had previously been praised for attempting to modernise the company, notably through the sale of its U.S. confectionery unit and several North American water brands. However, some of his more recent decisions, such as the acquisition and subsequent sale of a peanut allergy treatment maker, have drawn criticism for resulting in significant losses.

 

Swiss newspaper Neue Zürcher Zeitung likened Nestlé to a “supertanker,” emphasising its immense influence in the local stock market and the high expectations from investors, particularly pension funds. As Freixe steps into his new role, all eyes will be on whether he can steer the company back to stable growth and recover its share price in the long term.