Inside Nestlé's Strategy to Simplify its Supply Chains

Swiss food manufacturer Nestlé is centralising functions to reduce costs and is reorganising into four core divisions: pet care, coffee, nutrition, and food and snacking.

Its Annual Report 2025 says the new structure is designed to clarify accountabilities and empower local markets to own their execution and P&L. Nestlé is also focusing on winning customer channels such as e-commerce, which grew organically by 13.5% in 2025 and now accounts for over 20% of total group sales.

To improve efficiency, the group is standardising nine end-to-end business processes, including those that previously varied significantly by market, to create a more agile supply chain.

Volume growth accelerates in second half

The performance in the latter half of 2025 showed positive trends in real internal growth (RIG) across all zones and global businesses. RIG acceleration from 0.2% in the first half to 1.4% in the second half suggests that targeted actions are having an impact on volumes.

“I am encouraged by our performance during 2025, which reflects the targeted actions we have taken in a difficult external environment,” said Philipp Navratil, Nestlé CEO.

Philipp said that improving organic growth and market share trends indicate that the current strategy is effective. Market share trends for billionaire brands have also improved significantly, marking the best performance in over a decade.

World leader in diversified food processing

Nestlé is a Swiss multinational food and drink processing conglomerate headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the world, measured by revenue and other metrics.

The firm produces a vast range of products, including baby food, medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods and snacks.

Known for global powerhouse brands such as Nescafé, Nespresso and Purina, the company has operated for over 150 years, maintaining market-leading positions in several global categories while employing a simplified organisational structure.

Integrated nutrition unit to drive focus

By integrating its nutrition and Nestlé Health Science units into a single business, the company aims to drive focus and synergies.

This move removes the globally-managed business structure of Nestlé Health Science, allowing the integrated unit to be run locally through the zones.

“We are focusing our portfolio on four businesses, led by our strongest brands, with prioritised resources and a simplified organisation,” said Philipp.

The company is also managing its portfolio through brand rationalisation, which includes the potential sale of its ice cream business to Froneri. Nestlé Waters & Premium Beverages is expected to be deconsolidated from 2027 following partner engagement.

Automation through shared services acceleration

Nestlé is increasing its use of shared services to standardise and automate activities across its global footprint.

This shift is intended to speed up the supply chain and improve the overall productivity of the operating model. “We are stepping up our efficiencies and strengthening our financial position,” said Philipp.

He added that faster execution of this focused strategy will provide sustained improvement. The company is also cutting staff, targeting 16,000 roles by the end of 2027, to further simplify its operations. This transformation aims to reduce the variation in business processes that currently limits the value of data.

Customer centricity at the heart of growth

Consumer insights, innovation and marketing are being better connected to ensure that the consumer remains at the centre of the business.

The company is focusing on key trends such as health-conscious consumption and affordability to deliver growth. “Delivering value for the consumer is the ultimate driver of our business,” said Philipp.

He indicated that marketing muscle is being restored through best-in-class brand-building. High-potential growth platforms, such as medical nutrition and KitKat, are being prioritised for investment.

These platforms are expected to deliver high single-digit organic growth, supported by an additional US$700m of investment in 2026.

Improving market share and volume share

Nestlé reported organic growth of 3.5% in 2025, with pricing increase of 2.8% used to address inflation in coffee and cocoa.

In developed markets, organic growth was 2.3%, while emerging markets saw 5.4% growth. “While there is more to be done, we are confident that our faster execution of a more focused strategy will deliver sustained improvement through 2026 and beyond,” said Philipp.