Why is Nestlé making 16,000 job cuts and what has been the reaction?

Due over the next two years, the cuts will come alongside an accelerated plan to power growth by slimming down Nestlé to its best-performing brands, after years of lacklustre results that have left investors unimpressed.

“We will be rigorous in our approach to resource allocation, prioritising the opportunities and businesses with the highest potential returns,” says Navratil.

“The world is changing, and Nestlé needs to change faster.”

The news took unions by surprise, coming alongside a better-than-expected Q3 sales report – the first beat in many quarters. But it has delighted investors. Shares leapt 11.7% to a high of CHF85.06 following last week’s announcement, before settling at a roughly 6.4% gain at CHF81 this week.

What has Navratil promised?

Navratil has been quick to shake up Nestlé’s image as a slow-and-steady, predictable Swiss corporate.

“Driving Real Internal Growth (RIG) [a measure for volumes] is our number one priority,” he said.

To drive volumes, the company will “be bolder in investing at scale and driving innovation”, and foster a “performance mindset” culture that “does not accept losing market share”.

Cash flows, Navratil’s other priority, will be shored up by plans to substantially reduce the company’s cost base. The company now aims for an increased cost savings target of CHF3bn by the end of 2027.

The plans are not entirely Navratil’s own. Many of the changes were already underway under Freixe’s Fuel For Growth strategy – but Navratil has shown no shyness in digging in the spurs.

A new culture “that embraces a performance mindset, that does not accept losing market share, and where winning is rewarded” is being enforced with KPIs company-wide.

Even more dramatic is the plan to cut 12,000 “white collar professionals across functions and geographies”, and save CHF1bn. The plan doubles a previous CHF0.5bn goal. 

The proposed reduction of Nestlé’s supply and manufacturing headcount by 4,000 also supports existing plans. The company currently has 60bn in net debt – close to 3x its EBITDA – and the board would like to see that gap closed to around 2x. 

To help with the savings, Nestlé is “looking to progress” the exit of its waters and half of its vitamin, mineral and supplement business, according to Barclays analyst Warren Ackerman, though the divestments are still technically under review at the business.

Nestlé may even look to sell its US frozen foods division if its annual results fail to please in February 2026, Ackerman adds. But any other immediate movement to slim down Nestlé’s 2,000-plus brand portfolio is unlikely while reviews of its water and supplements businesses continue.

Read more:

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• Nestlé job cuts plan welcomed by investors

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• Nestlé defends exit from global dairy methane reduction alliance

What is the reaction?

Blindsided, the unions are unhappy. 

GMB, which represents 2,000 Nestlé workers in the UK, called the cuts a “gutless betrayal”; Unite has vowed on behalf of its thousand Nestlé worker members to “fight for every job” – and pointed out Nestlé’s CHF42.6bn (£40.1bn) gross profit in 2024. Neither yet knows where the cuts will fall, though European sources consider the UK, France and Germany prime prospects.

But Navratil’s “hunger to re-establish Nestlé as a top performer”, as HSBC analysts put it, has excited the market.

Backed by beats across the board in Q3, including a now-positive RIG of 1.5% – against consensus estimates of 0.4% – Nestlé’s early success in its Fuel For Growth strategy has given investors confidence in the proposed acceleration of the plans. 

Individual wins in coffee, where Nespresso delivered 3.3% RIG and 8.5% organic growth overall, and powdered and liquid beverages – with 7.3% RIG – helped power the beat, despite a soft US petfood market.

“A good debut from Nestlé and the new CEO,” says Ackerman.

“The new savings are the highlight, and hard cost savings are welcome, but we would still like to see it funding higher marketing spend.”

He suspects marketing spend will be a “key feature” of Nestlé’s full strategy, due to be revealed in February 2026, but calls the current update “a real line in the sand after five years of underperformance”.

“We think that the improving RIG and higher savings offer grounds for much greater confidence that the group can progressively return to a path of above-average profitable growth over the coming years,” HSBC analysts say.

“With the shares still on historically low absolute and sector relative multiples, we see plenty of scope for rerating as the group re-established its balanced growth mode.”