Presley calls the plan, which he conceived during his time as Nestlé’s chief financial officer, a play for the company’s long-term survival. Major foodmakers have struggled through several years of sputtering sales, losing market share to brands that are younger, trendier and, frequently, more healthful or sustainable. Globally, Nestlé’s sales growth has slowed every year since 2011, hitting a 20-year low in 2017. The decline prompted one powerful investor to publicly demand sweeping changes — including a corporate restructuring — at the 152-year-old company.
Presley says he’s confident his division can claw back its lost market share by “obsessively” refocusing on consumer trends. It’s a point Nestlé has made rather self-consciously at its new Virginia offices.
Murals in the 35-story building exhort the value of “authenticity” in food, and a shiny test kitchen boasts open shelving stocked with cookbooks and enameled Dutch ovens. At a ribbon-cutting event Tuesday, employees dished out compostable plates of chicken and freekeh while wearing shirts emblazoned with the phrases “in a relationship with food” and “good things come to those who hustle.”
Presley sat down with The Washington Post amid the festivities, in his first interview since becoming chief executive. This conversation has been edited for clarity and length, and there have been changes to the sequence of questions and responses.
Q: Not long after you took over as CEO, you wrote on Medium that “the world I knew when I began my Nestlé career two decades ago . . . is unrecognizable today.” Can you elaborate? What changed?
A: The way consumers access information and the amount of information they have access to has changed everything. If you think about it, 20 years ago the Internet was relatively new. Now consumers come to the shelf more educated than they have ever been before.
It also used to be if you developed a successful product, you had 50 years of runway. It would stay successful for a long period. But consumers are changing so rapidly today in terms of what they want and what the trends are. It’s about building an organization today that has the agility and desire to meet those rapidly changing needs.
Q: It’s no secret Nestlé and a number of other major food companies have struggled there. A recent report by the Dutch firm Rabobank said Nestlé lost 2.5 percent market share to small start-ups in the past four years. How do you think that happened?
A: I think that as the economy slowed, the industry in general went into a cost-cutting mode. We also cut aggressively, and we’re quite proud that we created a lot of value for our shareholders over the last few years, in terms of growing our margin and driving our return on invested capital. But that comes somewhat at a cost to the top line. Long-term, we have to now focus on reigniting growth in the organization. ...
There has been an industry-wide trend of “Big Food” losing share to “small food.” But there’s no magic to those products, there’s no intellectual property behind those products — it’s about meeting an unmet consumer need. If we get back to being absolutely consumer-led and consumer-focused, we can go out and capture those opportunities better than anyone else. That’s why this commitment to being consumer-obsessed is so important. . . . I believe we’ll get back to winning share in the marketplace across our businesses.
Q: Tell me a little about your plan for winning consumers back. I understand that since you became CEO, Nestlé has embraced a new strategy for improving old products and developing new ones.
A: When we think about how we win with consumers, there’s really three big buckets. The first bucket involves keeping our base brands relevant and evolving to meet today’s needs and tastes. Coffeemate, DiGiorno, Stouffer’s, all of our big billion-dollar brands — we’re really focused on renovating those. Those are the brands that get us into 97 percent of U.S. households.
The second piece is portfolio management. We divested our confections business earlier this year, for instance. We think someone else was better suited to win in confections in the U.S. On the other side, we’re looking to move more into high-growth categories where we already have a global presence, like coffee. We recently acquired Starbucks' packaged coffee and tea business, as well as Blue Bottle and Chameleon. That’s on top of our base Nescafe business.
And then the third bucket is internal incubation, quickly developing new products in-house. The idea is to disrupt ourselves and the industry before another small company disrupts it. We’re excited about Wildscape [a new line of frozen grain bowls, including the chicken and freekeh]. We’ve got several pizza products we’ve launched through that same incubation model. We have some probiotic bars we’re launching soon, too. And through our partnership with Terra [a food company incubator], we have early access to a lot of start-ups. But that’s not so much about helping us make acquisitions — it’s more about helping us understand the mind-set of innovators.
Q: Let’s talk about that first bucket. A number of your competitors have suffered notorious incidents where they tried to “update” an iconic brand, like Trix, and consumers rejected it. How are you planning to avoid that?
A: We absolutely can’t alienate consumers of our core brands. We want to make sure that anything we do around reformulation is something the consumer wants, and not just something we can talk about in public. We believe in lowering the amount of sodium in the market, for instance — you’ve seen a lot of our commitments on that, and we will reach those commitments in the end. But we’re going to do it the right way, where we don’t destroy the value in the brands we’ve spent so long building.
For me, it's also about offering a range of offerings in the category. We want to have a product for the consumer who is looking for really clean ingredients. We want to have an offering for the consumer that’s looking for organic. For the mainstream consumer who just wants the product they've always enjoyed, we want to continue to serve that need. It's about being able to serve a spectrum of consumers.
If you look at our coffee strategy, I think that's a great example. We've got a great, iconic brand in Starbucks, which means coffee to a lot of consumers in this market. Then we’ve surrounded that with other brands that meet other needs, whether it's Nespresso or Chameleon or Blue Bottle. They all have different business models and reach different subsets of consumers.
Q: How do you determine if a brand like Chameleon or Blue Bottle has enough staying power for Nestlé? What qualifies them as a potentially iconic food brand, as opposed to something that’s just trendy in the moment?
A: Well, the first determinant of fit is around category — is this a good category for us? Coffee is a global priority for Nestlé, but we participated in coffee largely through Coffeemate in the U.S. So it was important for us to add a big anchor brand to our portfolio.
From there, it’s our job to make sure those brands stay relevant. This goes back to the question of why small food took share from Big Food: It’s all about relevance with the consumer. Chameleon today is a great brand, and we can help drive its expansion. We also got a great team of people there. We have some great innovators and start-up thinking down in Texas.
Q: Are there any new Nestlé products you’re really excited about? Personally, not as CEO.
A: You know, mostly I’d say I love the things we’re doing with Coffeemate. . . . That is my favorite product. We’re trying to meet every consumer need there, whether it’s for a plant-based creamer or a cold-brew beverage. [Nestlé launched a line of bottled, Coffeemate-brand cold brew in May.]
I’m an original Coffeemate drinker — I like the less-sweetened version and I enjoy the original flavor. My backup is the Italian Sweet Cream. You can’t go wrong with that.
Q: Do you think you’re moving fast enough? It’s no secret that Dan Loeb, a major activist investor, has been critical about the global pace of change at Nestlé. I wonder how you would respond to the claim that change has come too slowly.
A: I won’t speak specifically about Mr. Loeb’s comments. But for us in the U.S., we’re really focused on driving a very fast-paced growth agenda. Whether it was the divestiture of the confections business or the addition of the Starbucks business, we’ve been aggressively reshaping our portfolio in this market to be successful in the future.
I’m proud of the work we’ve done there. And I consider myself a change agent. I’ve been at the company 21 years, and I’m quite proud of that. I know all the ins and outs of where we need to change or we can change.