Nestlé shakes up infant nutrition to tackle local rivals

Firm to appoint regional managers for $10bn business to address local trends faster

A customer takes a carton of SMA baby milk from a shelf.  The brand’s owner, Nestlé, the world’s largest packaged food firm, is reorganising its infant nutrition unit to compete with regional rivals.  Photographer: Jason Alden/Bloomberg

A customer takes a carton of SMA baby milk from a shelf. The brand’s owner, Nestlé, the world’s largest packaged food firm, is reorganising its infant nutrition unit to compete with regional rivals. Photographer: Jason Alden/Bloomberg

 

Nestlé, the world’s largest packaged food firm, is reorganising its infant nutrition unit to compete with regional rivals, the latest in a string of shake-ups for global packaged goods companies struggling to reignite sales.

The Swiss maker of Gerber baby food and Illuma and SMA formula said on Wednesday it would appoint regional managers for the $10 billion (€8.5 billion) business to address local trends faster.

The change comes five months after Nestlé’s new CEO listed its highly profitable infant formula as a priority focus.

Independent brands

Consumer groups like Nestlé, Unilever and Procter & Gamble are under intense investor pressure to lift margins as people flock to smaller, independent brands.

Infant nutrition is a key battleground for Nestlé and rivals such as Danone, which also ranks its baby unit as its most profitable, and Reckitt Benckiser, which recently bought Mead Johnson, the maker of infant formula Enfamil.

Major brands still retain consumer trust that they have lost in other areas of packaged food, particularly in China, a big focus for future growth due to its growing affluence.

Nestlé has come under pressure to shift gear from activist shareholder Third Point.

– Reuters