Nestle's Bold Move: 16,000 Jobs on the Line as Stock Surges 7%
In a dramatic turn of events, consumer goods titan Nestle has announced plans to eliminate 16,000 jobs, sending its stock soaring by 7%. But here's where it gets controversial: is this drastic measure a necessary evil to revive the company's fortunes, or a shortsighted move that could backfire? Let's dive in.
Imagine a supermarket shelf in Encinitas, California, stacked with jars of Nescafe Instant coffee—a staple in Nestle's vast portfolio. This scene, captured by Reuters photographer Mike Blake in September 2025, symbolizes the company's global reach. Yet, behind the scenes, Nestle is grappling with challenges that have prompted new CEO Philipp Navratil to take aggressive action.
The Job Cuts: A Double-Edged Sword?
Nestle's plan involves slashing 12,000 white-collar positions and an additional 4,000 roles over the next two years, all in the name of operational efficiency. While investors cheered the news, sending shares up 7.2%, the move raises ethical questions. Are job cuts the only way to boost profitability, or should companies explore more employee-friendly alternatives? And this is the part most people miss: the human cost of such decisions often outweighs the short-term financial gains.
Accelerating Cost-Cutting: A Race Against Time
Under former CEO Laurent Freixe, Nestle had already launched a 2.5 billion Swiss franc ($3.14 billion) cost-savings program. Navratil has now ramped this up to 3 billion Swiss francs by 2027. This acceleration comes as Nestle battles an uncertain consumer landscape, marked by U.S. tariffs and rising raw material costs, including cocoa and coffee beans.
A Glimmer of Hope: Third-Quarter Growth
Despite these headwinds, Nestle reported a better-than-expected organic growth rate of 4.3% in the third quarter. Notably, Real Internal Growth (RIG) turned positive, rising 1.5%, thanks to growth investments in brands like Nespresso and KitKat. However, the company's Greater China business remains a weak spot, dragging down organic growth by 80 basis points and RIG by 40 basis points. Nestle insists that new management is in place to turn things around, but will it be enough?
The Turbulent Year That Was
2025 has been a rollercoaster for Nestle. The ousting of CEO Laurent Freixe over an undisclosed romantic relationship in September marked a low point. His successor, Navratil, a former Nespresso CEO, has vowed to accelerate the company's strategic direction and value creation plan. Yet, the turmoil didn't end there. Chairman Paul Bulcke was forced to step down earlier than planned due to pressure from institutional shareholders over his handling of Freixe's allegations. Vice Chairman Pablo Isla, a former Inditex CEO, has taken the helm, but analysts warn that the new leadership duo must work hard to regain investor trust.
What's Next for Nestle?
While the focus is on reviving volume growth and the Chinese business, long-term investors are eyeing updates on the partial sale of Nestle's struggling water unit and underperforming vitamins business. The company's 20% stake in L'Oreal also remains a key point of interest. Navratil's promise to prioritize high-potential opportunities is ambitious, but will it translate into sustained growth?
A Thought-Provoking Question
As Nestle charts its course forward, we're left with a critical question: In the pursuit of profitability, are companies like Nestle sacrificing their social responsibility? Share your thoughts in the comments—do you think job cuts are a necessary evil, or is there a better way to achieve financial success while supporting employees? The debate is open!
