Nestlé will reduce portfolio to face competition

The competitive pressure brought by mega-mergers in the food and beverage sector will be Nestlé to accelerate the reduction of its portfolio of activities and better exploit its enormous size, signaled the President's Board of Directors, Peter Brabeck.
Nestlé 's "thank you" to make those two movements on the new competitive situation, said Brabeck to shareholders at the general meeting of the group that is the world leader in food sector, yesterday in Lausanne.
He exemplified the creation of Heinz and Kraft-Mondelez fusion-Douwe Egberts bring "a formidable competitor" to Nestlé in categories like coffee. Pointed out also the "spectacular" development of some multinationals in developing countries.
In 2013, the 3 g Capital and managing Berkshire Hathaway, Warren Buffet's, bought the Heinz and, last month, acquired Kraft, forming a giant food market, with annual revenue of about $ 28 billion. Nestlé made at 91.6 billion Swiss francs last year (about $ 94.7 billion).
Brabeck noted that the partners of 3 g Capital Investment Fund, the suíçobrasileiro Jorge Paulo Lemann, are known in the industrial world as a formidable cost cutters and have proven that they are able to reduce overall operating costs between 500 and 800 basis points, "which has a revolutionary impact on all other members of the industry".
According to the Chairman of the Board of Nestlé, the 3 g Capital and the Berkshire Hathaway Fund "sprayed the market" of the food industry, especially American, for serial acquisitions, initially in the drinks sector with the creation of the world's largest brewery AnheuserBusch Inbev, then with the purchase of fast-food chains Burger King and Tim Hortons and Heinz.
The merger of Heinz with Kraft will result in the third-largest food group in the United States in sales, after PepsiCo and Nestle, but surpassing Coca-Cola, General Mills and Kellogg's.
Brabeck note that both Kraft and Heinz showed modest growth even with products "extremely attractive" in the past, but "not adapted enough for the future".
For the Executive, if it is true that a company like Heinz today can be more profitable, the situation is not the same for sales growth, which declined 4.5% in 2014.
The challenge in any case is strong with competitors, especially in the United States, where Brabeck notes food consumption regression processed. For example, the consumption of sugary carbonated drinks fell 14% since 2004.
Apart from continuing to face an environment of modest growth in Europe, Nestlé aims to challenge China's slow-down pace, its second market.
To increase productivity and ensure the competitiveness, the leader signaled that there will be acceleration of asset sales. Is what he calls the revaluation of products and services worldwide, making choices for mauling best-positioned in the market in the sectors of health and well-being.
In addition, Nestlé has more than 400 factories and 330 thousand employees, but a decentralised structure which can be better leveraged to enhance efficiency.
Brabeck warned that these two broad guidelines, strategic and operational need "now an execution without failure".