Trouble brews at Nestle: CEO's ouster raises questions on what's next

Nestle dismissed its CEO Laurent Freixe, with immediate effect after an internal investigation confirmed his romantic involvement with a direct subordinate

Swiss fast-moving consumer goods (FMCG) giant Nestlé faces an uphill task in maintaining leadership stability, with investor confidence rattled and shares under pressure following the abrupt exit of its top boss.

What's the latest?

Nestlé dismissed its Chief Executive Officer (CEO) Laurent Freixe, with immediate effect after an internal investigation confirmed his romantic involvement with a direct subordinate. Initially, nothing was found, but the company later appointed an external committee of experts to conduct a deeper probe, which ultimately confirmed Freixe’s personal involvement.

 

The alleged affair was considered a violation of Nestlé’s code of conduct. Following the revelation, the Nestlé board, led by Chairman Paul Bulcke and independent director Pablo Isla, unanimously decided to terminate Freixe’s employment. While thanking him for his years of service, Bulcke stated that the dismissal was a “necessary decision.”

 

Why it matters

The sudden exit has brewed fresh trouble for Nestlé, coming barely a year after the abrupt removal of Freixe's predecessor, Mark Schneider. Schneider, who had steered the company through some of the most turbulent years during the Covid-19 pandemic, was terminated in August 2024.

 

While Nestlé never officially disclosed the reason for Schneider’s exit, company insiders told Reuters that the board had grown increasingly worried about weak sales growth. They also raised concerns about the slowdown in product development, pointing out that new and revamped products were taking longer to be created and launched.

 

According to Reuters, Nestlé reported inconsistent sales growth during Schneider's nearly eight-year tenure compared to its competitors, losing the momentum gained during the pandemic.

 

The leadership shake-up also comes shortly after the announcement of the impending departure of long-serving Chairman Bulcke. 

 

In a press release on June 18, the company stated that Bulcke will not stand for re-election at Nestlé's 2026 Annual General Meeting (AGM). “After nearly 50 years of service, including 14 years on the Executive Board, almost nine years as CEO and nine years as Chairman, Paul Bulcke has decided to step down from his Board functions at the end of the company’s next AGM,” it said.

What’s next for Nestlé?

Even with a new chief at the helm, the leadership reshuffle is expected to keep investors on edge. Earlier today, Nestlé named Philipp Navratil as its new CEO. Navratil, who has been with the group since 2001, brings experience from senior roles in Central America and the company’s global coffee business. Most recently, he led the Nespresso division, where he was credited with driving innovation and growth.

 

Meanwhile, the Board of Directors has already lined up its choice for the chairmanship. The company announced that it will propose Pablo Isla, Nestlé’s current vice-chairman, for election as chairman at the AGM on April 16, 2026. The timeline, Nestlé said, is designed to allow for a smooth transition and an orderly handover.

 

The new leadership now faces the critical challenge of steering a turnaround for the company. According to a Reuters report, Nestlé’s shares have shed nearly a third of their value over the past five years, lagging behind European peers.

What does it mean for India?

Nestlé enjoys a deep-rooted presence in India, with household names such as Maggi, Nescafé, KitKat, Cerelac, Milkybar, Polo, Milkgrow, Gerber, and Nestea. Having entered the country in 1912, the company has built a dominant position in India’s FMCG market over the past century. However, uncertainty at the global helm could send ripples through its Indian operations, potentially impacting consumer trust, brand stability, and upcoming initiatives.