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October 13, 2021

Nestle creates North America, China business zones under reorganisation

The KitKat maker says the “new architecture will strengthen the company's market-led approach".

Nestlé has restructured its geographic business zones with new single reporting units for North America and China, the Swiss food giant’s largest markets.

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Starting from 1 January, the “new architecture will strengthen the company’s market-led approach and further Nestlé’s ability to win in a rapidly changing environment,” the KitKat chocolate and Cheerios breakfast cereal owner said this morning (13 October). The new zones will begin to report results on the 21 April.

The current structure comprises: the Americas (AMS), encompassing North and Latin America; Europe, the Middle East and North Africa (EMENA); and Asia, Oceania and sub-Saharan Africa (AOA), along with peripheral globally managed reporting units for Nespresso, Nestlé Health Science, and ‘other’ businesses, which will remain separate.

Nestlé’s new structure entails five zones: North America (NA); Latin America (LATAM); Europe (EUR); Asia, Oceania and Africa (AOA); and Greater China, with the heads of those divisions restructured accordingly.

CEO Mark Schneider said: “With the new zone structure, we will significantly sharpen our geographic focus to drive sustained profitable growth everywhere we operate. This move will bring us closer to consumers and customers, unlock new business opportunities and enable us to be even more agile in a fast-moving consumer environment.”

North America represents annual sales of CHF24.7bn (US$26.5bn) and will be comprised of the US and Canada, Nestlé said in a statement. Reported sales for Greater China amount to CHF5.7bn and represents “significant growth potential for Nestlé”.

LATAM – Brazil, Mexico and the Caribbean region – generate sales of CHF9.2bn, while Europe contributes CHF17.7bn. AOA now includes the Middle East and North Africa regions with sales of CHF17.5bn.

Martin Deboo, an analyst at Jefferies, gave his initial thoughts this morning: “Our first take is that these changes improve considerably geographic coherence and focus; the willingness to expose North America and China performance to greater scrutiny implies confidence; and the reshuffling of the senior pack indicates that the process of renewal continues.”

In terms of personnel, Chris Johnson, the current executive vice president and CEO for the present Asia, Oceania and sub-Saharan Africa division, will retire from the board on 31 December and will serve in an advisory capacity for the new AOA zone until he leaves Nestlé at the end of January.

Steve Presley, the current chairman and CEO of Nestlé USA, will join the board as EVP and become the chief executive of the North America zone.

David Zhang, the current CEO of Totole – Nestlé’s food-seasoning business – and business executive officer for food in Greater China, will join the board as EVP for the Greater China zone. Rashid Qureshi, the current head of Greater China, will leave Nestlé at the end of the year.

Remy Ejel, the existing chief for the Middle East and North Africa, will join the board as EVP and CEO of the AOA division.

Finally, Laurent Freixe will lead the new LATAM zone as EVP and CEO, while Marco Settembri will head up Europe in the same capacities.

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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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