Nestle to Boost Marketing Spend to 9% Following $2.8B Cost-Cutting Efforts

By 2027, Nestle aims for $2.8B cost savings and a marketing boost to recover core business operations.

By Thea Felicity

Nov 19 2024, 10:48 AM EST

SWITZERLAND-FOOD-COMPANY-EARNINGS-NESTLE — A sign of Nestle, the Swiss food giant, is seen at the company's Headquarters in Vevey, Switzerland 23 August 2006. Nestle announced that its first half net profit had increased 11.4 percent to 4.15 billion Swiss francs (2.68 billion euros, 3.37 billion dollars). Sales rose 11 percent to 47.14 billion Swiss francs, with organic growth above target at 6.4 percent, the group said in a statement. FABRICE COFFRINI/AFP via Getty Images

As one of new Nestle CEO Freixe's plans, the FMCG giant is on course to recover financial losses by 2027.

Recently, the company shared that it will be cutting costs by $2.8 billion by 2027 and will nearly double its marketing budget under new CEO, Laurent Freixe, who took position in September. He succeeded Mark Schneider who led the company into weak sales and marketing cuts, which challenged Freixe's new leadership.

Besides saving at least $2.83 billion, Reuters shared that there are plans to generate additional savings of $1.2 billion. These savings are expected to make the company more efficient and competitive in the marketplace.

Nestle's Upcoming Marketing Spend

The other area where Nestle will extend momentum on, for future growth, includes increasing its ad-spending and marketing to 9% of total sales by 2025. Marketing expenses increased slightly only to 7.7% of sales in 2023.

By growing its marketing investment, the company can get more consumers pulling towards its big brands: Nescafe, KitKat, and Milo. Nestle's financial operation improvement comes in the wake of a company that is seeking to recover market share losses due to the decision to reduce investment in advertising and innovations during the COVID-19 pandemic.

According to Bloomberg, Nestle has also announced plans to hive off its water and premium beverage businesses into a standalone unit from 2025. This is aimed at streamlining operations and focusing on core brands.

Despite criticisms over its unwieldy portfolio of over 2,000 brands, the company would fix laggard businesses rather than sell them. This way, Freixe's strategy would be to make Nestle more efficient and agile, in order to restore organic growth and improve bottom-line profitability.