Nestlé
Headquarters: Vevey, Switzerland
Founded: 1867
Nestlé’s origins trace back to 1867, when German-Swiss pharmacist Henri Nestlé developed an infant cereal that helped save a premature baby’s life. More than 150 years later, Nestlé has evolved into the world’s largest food and beverage company, with a portfolio of over 2,000 brands , from KitKat and Nescafé to Purina pet food and San Pellegrino water. With operations in nearly 190 countries, chances are something in your pantry carries its name.
Few categories showcase Nestlé’s strength better than coffee. The company pioneered instant coffee with Nescafé in the 1930s, introduced the single-serve capsule with Nespresso in the 1980s, and bolstered its position in 2018 through a multi-billion-dollar licensing deal with Starbucks. Together, these brands give Nestlé unmatched scale and pricing power in a secular growth category. In 2024, coffee once again proved resilient, delivering mid single-digit organic growth and helping to offset weaker areas of the portfolio.
“With operations in nearly 190 countries, chances are something in your pantry carries its name. ”
Pet care has quietly become Nestlé’s second major growth engine. Built through decades of acquisitions, the Purina portfolio now leads globally in pet nutrition. The long-term trend of treating pets like family has driven steady growth, and premium brands like Pro Plan and Purina ONE continue to gain share. Pet care now accounts for just over 20% of group sales and is expected to expand further as pet ownership grows, especially in emerging markets, and as premiumisation continues to shape the industry.
Nestlé’s Nutrition and Health Science divisions reflect its origins as a health-focused food company. Its infant formula brands, including NAN and Gerber, remain category leaders, though they’ve faced headwinds in recent years. Meanwhile, Nestlé Health Science has grown through bolt-on acquisitions, targeting long-term themes like healthy aging and wellness through products such as vitamins, supplements, and medical nutrition.
One of Nestlé’s lesser known but highly valuable assets is its stake in L’Oréal. The company first invested in 1974 at the invitation of the Bettencourt family, who sought to shield L’Oréal from nationalisation. Today, Nestlé still owns around 20% of the cosmetics giant — a stake worth approximately $47 billion, or about one-fifth of Nestlé’s market capitalisation. While not central to its food and beverage strategy, the holding has compounded at over 12% annually over the past 30 years, proving to be exceptionally lucrative.
Financially, Nestlé remains a durable compounder. In 2024, organic sales growth slowed to 2.2%, its lowest in over two decades, following years of high cost inflation and corresponding price increases across the consumer sector. While these price hikes dampened volume growth, pricing is now normalising, setting the stage for a return to volume-led growth. Return on invested capital remains robust at approximately 17%, underscoring the company’s enduring brand power and world-class distribution.
“People and pets eat and drink daily, regardless of economic conditions.”
Looking ahead, Nestlé faces both enduring and emerging challenges. Evolving consumer preferences, favouring fresher, healthier, and less processed foods, have weighed on some legacy lines, but they’ve also spurred innovation. Nestlé is responding by pruning slower-growth units, investing in higher-growth categories like coffee and pet care, and reshaping its portfolio through targeted acquisitions and divestitures.
There has been quite some instability at the top of the company recently; Laurent Freixe, who became CEO just last September, was dismissed a couple of months ago as a result of an undisclosed romantic relationship with a direct subordinate. While we rarely like to see this sort of turbulence in management roles, we are content that the company’s strategy is unchanged. In fact, early evidence suggests that the new CEO, Philipp Navratil is accelerating the changes at the company. Under his leadership, Nestlé will follow peers like Unilever by focusing investments on its biggest, fastest-growing global brands, including KitKat, Nescafé, and Maggi. This shift will be supported by increased brand and marketing spending, funded by a CHF 2.5 billion efficiency programme to be completed by 2027, including a headcount reduction of some 16,000 roles. In parallel, Nestlé is preparing to separate its slower-growing water division, potentially selling a majority stake to private equity while retaining a minority interest.
For all its size, Nestlé’s fundamental appeal is straightforward: people and pets eat and drink daily, regardless of economic conditions. This provides steady demand, pricing power, and the reliable conversion of profits into cash. Coupled with unmatched global distribution and a portfolio of trusted brands, Nestlé is well positioned to continue delivering consistent returns just as it has for over 150 years.
