Nestlé restructures in America to grow back

When Paul Grimwood took over a year and a half ago the operation of Nestlé in the United States, which passed through difficulties, he didn't know he would face an unlikely problem: hair nets.
The seven independent companies of Nestle in the country, which operate 87 factories, were buying networks to protect the hair and shoes more than 100 security suppliers. As units were not befriend each other, Nestle, the biggest food company in the world, couldn't get the best discounts on its biggest national market. Now, Nestlé States that uses only "a handful" of suppliers.
The same thing happened with flavourings. By combining purchases from various companies, he reduced the number of suppliers of category of 48 for 4 in the us. "If you take into account the size and scale of the entire American market, it makes a phenomenal difference in profitability," said Grimwood in recent interview with "The Wall Street Journal.
Paul Grimwood took over the branch for a year and a half and already cut in 43% the number of versions of company products
Nestlé is counting on this English of 51 years to put back on track the stagnant American operation, which is responsible for about 25% of the $ 103,37 billion in sales of the multinational.
In addition to the hair nets and flavoring, he must deal with a wide variety of brands, some of which are disappearing. Chocolate bars like "Oh Henry" and "100 Grand" they don't make more success, the market share of fruit juices for children "Juicy Juice" falls for years and the chocolate Ovaltine (called Ovaltine in Brazil) no longer has u.s. TV commercials.
Since his arrival, Grimwood cut in 43% the number of variations of Nestlé 's products, such as flavor or size, to streamline operations.
Nestlé also began to dispose of businesses that are no longer part of your strategy or are in categories with poor performance. She sold the greater part of the operation of the product line "diet" Jenny Craig in November and the PowerBar energy bars mark in February. Grimwood said "there may be one or two more brands in the portfolio that we will announce at the appropriate time".
Last year, Nestle's u.s. revenue grew 1.5%, well below the average of 4.6% recorded in the previous three years. The weakening contributed to that Nestlé not fulfilled old sales growth targets, which affected its stock price. Since the beginning of the year, shares of Nestle brought the Stoxx Europe 600 companies index Food Beverage industry &, foods and drinks, with a lower performance than competitors such as Unilever.
In a recent interview, Paul Bulcke, CEO of Nestlé, agreed that American operations needed a jolt. Grimwood, he said, is the man "to establish who we are in America."
Grimwood spent ten years at Mars chocolate manufacturer before going to Highland Distillers of Scotch. In 2001, he went to the area of animal nutrition from Nestlé, Purina PetCare, and then moved to the sweet segment, before taking over the entire British and Irish operation of Nestlé. In October 2012, he went to the United States.
Grimwood's next target will be the frozen food, the second largest category of company's products in the u.s., after animal feed. Like other food companies, Nestle was affected by a rapid migration of consumers of frozen foods for fresh food, considered healthier. Many of its brands of frozen, as "Lean Cuisine" and "Hot Pockets", lost relevance to American consumers.
The operating profit of the frozen sector of Nestlé in the u.s. fell an average of 7% per annum over the past three years, but would have grown 4% per annum if the line "Lean Cuisine" was withdrawn from the accounts, according to the company.
Grimwood says that "Lean Cuisine" is in "repairs" box of Nestle. The company began repositioning the brand-pioneer in diet nutrition segment, which suffered from the increased competition and the shift in consumer tastes-to attract more people who seek a healthier lifestyle than those who want to lose weight. Although the brand is not as big as before, the "Lean Cuisine" still generates $ 1 billion in annual sales.
"When we adjust, we will see what will be the next strategic steps," says Grimwood. The same sentiment applies to the "Juicy Juice", which was losing money until a few years ago.
Another priority is the ice cream, a classic of Nestle that comes losing market to cheaper brands. Betting on innovation, Nestlé launched in 2013 ice cream brands Haagen-Dazs, Edy's and Dreyer's coconut water to try to align the trends.
"Nestle has very serious work to do," says Thomas Russo, who manages a stake in Nestle valued at about $ 1 billion at Gardner Russo Gardner &. He said that Nestle's brands are "hungry for investment".
Some areas of Nestlé in the u.s. are thriving. The Purina PetCare, which represents about 25% of sales of the multinational in the country, has grown 4% per year in North America. The candy operation also reversed his result, after being in deficit for years.
Nestlé also hopes to obtain higher margins in revenue after acquiring the rights for North America from various skin care products that will sell through the Galderma, its operation of dermatological products. The United States and Canada represent more than half the global market for aesthetic treatments.