Nestle to up ad spend, spin-off Perrier, other water brands

Nestlé announced plans on Tuesday to reduce costs and increase investment in advertising as part of its strategy to accelerate top-line growth under new CEO Laurent Freixe.

Nestle to up ad spend, spin-off Perrier, other water brands

The Swiss food giant also intends to divest its water and premium beverages business, including brands such as Perrier and San Pellegrino, starting in 2025. Freixe outlined the company’s "Accelerating Nestlé" strategy during a capital markets day, emphasizing the need to "unlock the full potential" of Nestlé’s products through increased spending on brands and growth platforms. The company aims to raise advertising and marketing expenses to 9% of sales by the end of 2025 to drive category growth and improve market share. Key initiatives include targeted investments in high-performing brands, focused innovation efforts, addressing underperforming areas, and advancing its digital transformation to create a data-driven, AI-powered enterprise. These efforts will be supported by additional cost savings of CHF 2.5 billion by 2027 through improvements in procurement, structural efficiencies, and commercial investments.

Nestle confirms water spin off

Nestlé also confirmed plans to spin off its water and premium beverages division in early 2025, to be led by Muriel Lienau, head of Nestlé Waters Europe. The new management team will evaluate strategic options, including potential partnerships. For 2024, Nestlé reiterated its guidance of 2% organic sales growth, a trading operating profit margin of around 17%, and flat earnings per share in constant currency. By 2025, organic sales growth is expected to improve, although margins are projected to decline slightly from 2024 levels. Medium-term goals include organic sales growth of at least 4% in a stable environment and a profit margin of 17% or higher. Analysts offered mixed reactions. RBC Capital Markets’ James Edwards-Jones called the 2025 and medium-term guidance reassuring but cautioned that the target for 4% growth is ambitious, noting that consensus is currently below that figure. He suggested that more conservative guidance might ease investor concerns.