VEVEY (Reuters) -Nestle will boost advertising and marketing, trim costs, carve out its water and premium drinks businesses into a standalone global unit, and implement other changes to drive growth under new chief Laurent Freixe, the company said on Tuesday.
The Swiss food giant aims to achieve cost savings of at least 2.5 billion Swiss francs ($2.83 billion) by 2027, in addition to ongoing savings of around 1.2 billion Swiss francs.
Nestle forecast medium-term organic growth to be more than 4% in a normal operating environment, and an underlying trading operation profit margin of 17%.
The Swiss company will increase its investment in advertising and marketing to 9% of its total sales by 2025 to support growth, the company said at its capital markets day event in Vevey, Switzerland.
Advertising and marketing expenses in 2023 were 7.7% of its sales, an increase of 80 basis points from prior year, according to Nestle’s annual report.
Nestle also said on Tuesday that its water and premium beverages businesses will be carved out into a global unit starting Jan. 1, 2025.
($1 = 0.8835 Swiss francs)
(Reporting by Richa Naidu; Editing by Himani Sarkar and Sherry Jacob-Phillips)