Nestlé’s New CEO Expected to Grow Health and Wellness Products

GettyImages-520836870-compressorSchneider will be the first outsider to run Nestle since 1922, according to the Wall Street Journal. Schneider, who has been chief executive at Germany-based Fresenius SE for the past 13 years, will succeed current Nestlé CEO Paul Bulcke who has been at the company for more than 40 years.

Fresenius SE generates annual sales of more than $31 billion and sells products and services for hospitals and outpatient treatments. The company’s stock price has more than quadrupled during Schneider’s tenure. At the age of 50, Schneider is a relatively young CEO in the consumer goods industry, something experts say will allow him to lead the company for years to come.

Jean-Philippe Bertschy, an analyst at Bank Vontobel in Zurich told Fortune that it’s “striking” that Nestlé selected an executive from outside of the consumer goods sector. “It shows Nestlé really wants to transform the business and not just do a little bit of health and wellness on the side,” said Bertschy.

While the company is known for products like Nescafé instant coffee, Kit Kat, DiGiorno Pizza, and Perrier, it has been expanding its nutrition and health sciences divisions over the past eight years. When Schneider takes the helm in 2017, the company will integrate those divisions into the main organization with both reporting directly to the CEO.

“At the age of 50, Schneider is a relatively young CEO in the consumer goods industry, something experts say will allow him to lead the company for years to come.”

While the company’s health and wellness segment is only a small portion of the company’s overall business, analysts say it’s growing at a rate of 7.6% compared to the company’s 4.2% overall growth rate. That segment also has a potential to achieve margins of 20% compared to 15% for the all Nestlé groups. Some of the company’s newer products include medical foods for patients with conditions such as Alzheimer’s and gastrointestinal problems.

Nestlé has seen weakened sales growth in recent years with slowdowns in major markets and negative impacts of a strong Swiss franc. The company missed its sales target of organic growth for the past three years, causing some analysts to raise questions about its long-term growth potential.

Société Générale analyst Warren Ackerman told MarketWatch that the appointment is a “a breath of fresh air” and that Schneider “will bring something new to the table and reinforce Nestlé’s credentials in health and wellness.”

Schneider will officially join the company on September 1 and will start as CEO on January 1, 2017.

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Craig Guillot
Craig Guillot is a business writer based in New Orleans, La. His work has appeared in Wall Street Journal, Entrepreneur, CNNMoney.com and CNBC.com. You can read more about his work at www.craigdguillot.com.

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