Nestle's price-hike strategy lost shopper loyalty — CEO Mark Schneider out after 8 years

On August 22, 2024, Nestle announced that CEO Mark Schneider would step down as CEO and board member after eight years leading the world's biggest packaged food company, effective with company veteran Laurent Freixe taking over on September 1. Schneider, the former boss of German healthcare company Fresenius, was Nestle's first external CEO in nearly a century, hired after a career spent far from Vevey; his exit returned the company to its normal practice of promoting chief executives from within.

The undoing was pricing. After the pandemic boom and price hikes it had to make following Russia's invasion of Ukraine, Nestle struggled to regain the shopper loyalty it lost, according to CNBC's account: Unilever, Danone and other food makers managed to lower some prices and drive sales volumes, while Nestle sharply underperformed. Its shares hit their highest level in January 2022, then turned down from May 2023. In July 2024, a month before the CEO change, Nestle cut its full-year sales outlook and said it had to slow its price hikes as cash-strapped customers became more price-conscious.

Freixe, 62, joined Nestle in France in 1986, led its European business through the 2008 financial crisis, headed the Americas unit, and ran Latin America from 2022 with strong growth; he had lost the 2016 CEO contest. 'I will put a lot of focus on the core. I won't exclude, of course, M&A,' he told journalists, at a company with more than 2,000 brands. His in-tray: an underperforming health science unit and a struggling North American frozen food business with brands like Lean Cuisine and DiGiorno. Chairman Paul Bulcke said the board had not considered an outside candidate.

Shares slid from their January 2022 peak and sharply underperformed Unilever and Danone; the outlook cut cost Schneider the top job after eight years

Price hikes after COVID and the Ukraine invasion lifted revenue but pushed away shoppers; rivals cut prices and drove volumes while Nestle could not.

Growth sagged enough that Nestle cut its full-year sales outlook in July 2024 — more than a year after the shares peaked in January 2022 and turned down.

Schneider's post-pandemic reorganization away from the decades-old category-led structure never restored the investor confidence the stock underperformance kept draining.

Price increases book easy revenue until shoppers trade away; volumes carry loyalty, and a board that hired a turnaround outsider will replace him when loyalty breaks.

Freixe started in the role before the September 1, 2024 effective date, promising focus on the core over M&A, with analysts flagging possible pruning of weaker businesses. Jefferies' David Hayes called the change unsurprising 'after an increasingly difficult year'; Bank Vontobel's Jean-Philippe Bertschy noted successful food companies like Lindt and Danone all had marketing-and-sales people as CEO.