Nestle Weighs Sale of Vitamin Brands After Volumes Decline

This content was published on July 24, 2025 - 09:29

4 minutes

(Bloomberg) — Nestle SA’s new Chief Executive Officer Laurent Freixe is accelerating plans to revive growth at the world’s largest food company, kicking off a strategic review of struggling vitamin brands after a drop in sales volumes.

The maker of Nespresso and KitKat candy bars saw volumes decline in the second quarter, underlining the challenge facing Freixe, who took over from Mark Schneider last year. Revenue rose 2.9% on an organic basis in the first half of the year, in line with analyst estimates. Nestle shares fell 5% in early trading in Zurich.

“Disappointment on volumes” and a “fragile” commitment to margins in the second-half should weigh on shares, Jefferies analysts inluding David Hayes said in a note.

The Swiss group is considering the future of some underperforming brands in its vitamins, minerals and supplements business, including Nature’s Bounty, Osteo Bi-Flex, Puritan’s Pride, and US private label, according to a statement Thursday. This may result in divestment of these brands, while the focus on premium brands such as Garden of Life increases.

The strategic evaluation of its waters business, meanwhile, is “progressing.”

Nestle is joining other European consumer products companies in paring back their portfolios to seek faster growth. Reckitt Benckiser Group Plc this month agreed to an up to $4.8 billion deal to sell most of its homecare business to private equity firm Advent International, while and Unilever Plc is moving to spin off its £15 billion ($20.4 billion) ice-cream operation. Shares in Reckitt jumped 11.3% after the company showed progress on its plan to boost growth.

“We acquired those assets that are under strategic review to get scale. And we believed at the time that this was critical to strengthen our leadership. Now over time we realized that the growth and the value creation opportunity is more at the premium end,” Freixe said on a call on Thursday.

Freixe, who took the helm in September, is reviewing some of former CEO Schneider’s bets on vitamins after he expanded the company into the field in 2017. Nestle bought vitamin maker Bountiful Co. only four years ago for $5.75 billion, trying to appeal to health-conscious consumers.

Growth Focus

The CEO is seeking to reignite growth by boosting advertising spending and betting on fewer but bigger product initiatives. That’s funded with a 2.5 billion-Swiss franc ($3.15 billion) cost-cutting plan by 2027, with the company saying it’s on track to reach 700 million francs this year.

His six bets — including Nescafe Espresso concentrate, KitKat tablets and pyramid-shaped cat food — generated sales of more than 200 million Swiss francs in the first half. The goal is for each of these brands to reach at least 100 million Swiss francs annually over the next three years.

A key headwind was the sales decline in Greater China, with Nestle saying it’s “taking material steps” that include changes in leadership. The measures are expected to weigh on growth for up to a year.

Another challenge for Nestle and its rivals is balancing price hikes aimed at offsetting soaring coffee and cocoa costs without driving away cost-conscious shoppers. Most of the increases were implemented in the first half, Freixe said, adding that “it seems that we have reached the peak at the moment” in terms of commodity inflation.

Demand for coffee is holding up well despite the pricing action, while confectionery has seen some volume pressure, Nestle said.

The group is also reviewing how it can adjust its sourcing and manufacturing to deal with the US tariff policy, Chief Financial Officer Anna Manz said, adding that the bulk of its US products are already manufactured domestically.

Nestle reaffirmed its full-year outlook despite “increased headwinds” that include US tariffs and a strong Swiss franc. It expects improvement in organic sales growth compared with 2024 — when it fell to the lowest level in decades — and for a key profit margin at or above 16%.

(Updates with analyst comment in third paragraph.)