Nestlé Slashes 16,000 Jobs
Nestlé is launching a sweeping reorganization that includes cutting 16,000 jobs and divesting its ice cream and bottled water businesses. The CPG giant is also rolling out a new bonus model for its 271,000 employees as it intensifies cost-cutting, but investors seem wary — its market cap has fallen nearly 10% year-on-year.
The sweeping changes come from new CEO Philipp Navratil, who took the helm in September 2025 after his predecessor was dismissed. Navratil has emphasized a need for a "performance mindset" and has stated, "The world is changing, and Nestlé needs to change faster." The job cuts, affecting about 6% of the workforce, are part of an accelerated cost-saving plan now targeting CHF 3 billion by 2027. Of the 16,000 positions being eliminated over the next two years, 12,000 are "white-collar" professional roles across various functions and geographies, with the remaining 4,000 in manufacturing and supply chain. This move is expected to generate annual savings of CHF 1 billion by the end of 2027. The company anticipates restructuring costs of about 2 billion Swiss francs related to the layoffs. The shake-up extends to compensation, with a new six-tier bonus system replacing the previous three-tier framework. Top-rated "exemplary" employees can now receive up to 150% of their bonus target, a jump from the previous 130% cap. Conversely, those rated "unsatisfactory" may receive no bonus or a maximum of 50%, a stark contrast to the past where most employees received at least 80% of their bonus. A key metric in the new bonus structure is "real internal growth" (RIG), a measure of sales volume. This signals a strategic priority to combat sluggish demand after posting a RIG of just 0.8% in 2025. CEO Philipp Navratil has stated the company will be "ruthless" in assessing performance against these new metrics. The restructuring also involves a significant portfolio shift, focusing on four core categories: coffee, petcare, nutrition, and food. Nestlé plans to sell its remaining ice cream business to its joint venture, Froneri, and aims to divest its waters and premium beverages arm, which includes brands like Perrier and San Pellegrino, by 2027. CEO Navratil referred to the remaining ice cream holdings as a "distraction" from larger growth opportunities. This strategic pivot follows a turbulent period for the company, which included the abrupt departure of the former CEO and chairman, a global recall of some baby formula products, and rising commodity costs for inputs like cocoa. Despite the cost-cutting measures, investors initially reacted positively, with shares rising after the announcement.
