Nestlé reveals plans for 16,000 job losses, with confectionery operation impact unknown

Nestlé has revealed plans to cut a total of 16,000 from its global workforce over the next two years, with its impact on confectionery operations around the world uncertain, writes Neill Barston.

The company’s incoming CEO Philipp Navratil, who was only appointed at the start of last month after the controversial dismissal of its former postholder Laurent Freixe amid a personal relationship incident, has stressed the need to “drive innovation with the highest possible returns.”

Its latest announcement comes amid its 9-month results, which showed year-on-year sales down 1.9% from CHF 67,148 billion to 65.86 bn across its portfolio, with the company citing its performance in China as a contributing factor, along with turbulent trading conditions and higher ingredients input costs including within the cocoa sector.

The business operates a number of confectionery operations within the UK, including its flagship York KitKat production site, as well as across Britain, and mainland Europe. 

However, it was reportedly ‘unable’ to state in which geographies or markets that its headcount would be reduced, other than that it will be looking to reduce 12,000 white-collar jobs, and a further 4,000 cuts within its manufacturing supply chain. This is anticipated to save around £1 billion a year on its employee base, which reportedly stands at around 277,000 around the world.

While its results showed a downturn in overall performance, the company highlighted the fact that confectionery and coffee were its largest growth contributors. It described its confectionery operations as being ‘more pronounced in confectionery’ in light of present conditions.

According to its results, confectionery delivered high single-digit growth, led by pricing in Tollhouse (US) and Garoto (Brazil). Notably, its real internal growth figures remained negative, but were boosted by pricing flexibility and an expansion into chocobakery.

Europe remained a notable stronghold for the company, with sales up 4.3%, and notably, the company added that it has seen encouraging signs of market share increases, including within its confectionery markets, which resulted in the business projecting an improved position with its latest announced financial savings plans.

Philipp Navratil, Nestlé CEO commented: “Driving RIG-led growth is our number one priority. We have been stepping up investment to achieve this, and the results are starting to come through. Now we must do more and move faster to accelerate our growth momentum.

As Nestlé moves forward, we will be rigorous in our approach to resource allocation, prioritizing the opportunities and businesses with the highest potential returns. We will be bolder in investing at scale and driving innovation to deliver accelerated growth and value creation. We are fostering a culture that embraces a performance mindset, that does not accept losing market share, and where winning is rewarded.

The world is changing, and Nestlé needs to change faster. This will include making hard but necessary decisions to reduce headcount over the next two years. We will do this with respect and transparency. Along with other measures, we are working to substantially reduce our costs, and today we are increasing our savings target to CHF 3.0 billion by the end of 2027.

The actions we are taking will secure Nestlé’s future as a leader in our industry. Collectively, they will enable us to improve our overall performance and deliver shareholder value.”