Nestlé S.A. NESN
Nestlé has been too slow to adapt to a changing consumer industry; adopting a #NestléNOW mindset — sharper strategy, bolder portfolio divestitures including the L'Oréal stake, and a three-division split — can double EPS by 2022.
Thesis
Third Point, one of Nestlé's largest investors, argues the CHF 90bn consumer-goods giant has been too slow to react to industry change and operates far below potential: organic sales halved from 5.9% in 2012 to 2.4% in 2017, and shares underperformed European staples peers by 119% over ten years. CEO Mark Schneider has acknowledged problems but the pace of change is insufficient, and the Bulcke-led board has zero external food & beverage directors. Third Point's #NestléNOW roadmap asks Nestlé to Be Sharper (clarify strategy, refresh the board), Be Bolder (divest up to 15% of sales, monetize the 23% L'Oréal stake, recycle into acquisitions and buybacks), and Be Faster (split into three divisions: Beverages, Nutrition, Grocery). The combined program can double EPS from CHF 3.55 to CHF 7.00 by 2022, a 14.5% CAGR with 20% EBIT margin.
SCQA
Nestlé is the world's largest food & beverage company with CHF 90bn of sales, 30+ billion-dollar brands, and balanced exposure to developed and emerging markets, anchored by coffee, pet, nutrition, and water.
Organic growth halved from 5.9% (2012) to 2.4% (2017), dividend growth stalled, TSR lags European staples peers by 119% over ten years, and CEO Schneider's response has been too incremental for a staid, bureaucratic culture.
Adopt a #NestléNOW mindset: Be Sharper on strategy and board composition, Be Bolder by divesting 15% of sales and monetizing the L'Oréal stake, and Be Faster by splitting into Beverages, Nutrition, and Grocery divisions.
Mid-single-digit organic growth, 20.0% EBIT margin, and CHF 7.00 EPS by 2022 — roughly doubling earnings from CHF 3.55 at a 14.5% CAGR, with meaningful re-rating potential versus peers like Unilever and L'Oréal.
The three reasons
- 1
Organic sales growth halved from 5.9% (2012) to 2.4% (2017); TSR lags European staples peers by 119% over 10 years
- 2
47% of sales sit outside key categories (coffee, pet, nutrition, water) — divest 15% and monetize the L'Oréal stake
- 3
Split Nestlé into three category-led divisions to double EPS from CHF 3.55 to CHF 7.00 by 2022 (14.5% CAGR)
Primary demands
- Be Sharper: clarify total company and category strategies, improve financial reporting transparency, add external food & beverage expertise to Board
- Be Bolder: divest up to 15% of sales (non-core categories like ice cream, frozen food, packaged meats, skin health)
- Monetize non-core 23% financial stake in L'Oréal and recycle proceeds into acquisitions and share repurchases
- Be Faster: split business into three divisions — Beverages, Nutrition, Grocery — each with its own CEO and regional structure
- Take leverage to ~1.5-2.0x and use balance-sheet capacity for buybacks ahead of the earnings inflection
- Replace Chairman Paul Bulcke and refresh the Executive Board with outside perspectives
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- Unilever 2020 margin and organic-growth targets (bolder and better-executed than Nestlé's)
- L'Oréal trading multiple (30.4x vs. Nestlé 20.2x) as a re-rating benchmark
Notable slides (5)
Notes
Follow-up deck to Third Point's June 2017 letter on Nestlé; explicitly frames the campaign as a one-year progress grade on management's response. Memorable rhetorical frame: #NestléNOW with three parallel asks (Be Sharper / Be Bolder / Be Faster) tied to three problem areas (Strategy / Portfolio / Organization) — strong SCQA and very clean framework-slide pattern worth extracting. Deck names Paul Bulcke as a soft villain (Chairman, former CEO) but stops short of directly attacking Mark Schneider, whom it credits with some progress. Stake not disclosed here; Third Point's reported Nestlé position at the time was ~$3.5bn (~1.3%), but the document only says 'one of Nestlé's largest investors'. No formal sum-of-parts valuation; upside case is an EPS bridge (CHF 3.55 → 7.00 by 2022).