Warc Blog

Nestlé prepares brand axe

3 October 2013
VEVEY: Nestlé, the Swiss food and drinks business, is preparing to offload underperforming brands in a bid to improve the company's performance.

Chief executive Paul Bulcke told a meeting of analysts that some of the corporation's 1,800 brands had been "sailing under the radar screen for too long without being part of the party" but declined to name them.

Nonetheless he was clear there would be divestitures. "We want to be in business, not in agony," he said.

Where things could be fixed, he intended to do that "but there are certain things that we don't see we can fix". Accordingly, two shortlists had been drawn up, one of brands to fix, one of brands to sell.

"Now the action has to come," he declared, adding that the timelines would have to be wise.

He also noted a sharp rise in competition from local food producers around the world. "These players are developing very fast, going international or are big in their own country and resizable," he said, "they are very strong."

There has already been speculation about which brands will be axed. Sources told Reuters last week that PowerBar energy bars were up for sale. And earlier this year the company admitted that the performance of its weight loss brand Jenny Craig was "very much below our expectations".

Chris Brockman, senior global analyst for food and drink at Mintel, told Marketing Week that some brands had underperformed as a result of Nestlé's focus on its more lucrative categories, including nutrition, confectionery and water.

PowerBar, he said was "reflective of old-fashioned diet-oriented brands which don't resonate with what consumers are looking for now when it comes to managing their health".

He added that Nestlé was also struggling in the ice-cream category, in which it had been global leader seven years ago. "Unilever, with brands like Magnum, has taken over the top slot and outside America Nestlé has found it tough," he said.

Data sourced from Seeking Alpha, Marketing Week; additional content by Warc staff

 
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