Nestlé rings in big baby-food changes

Nestlé, the world’s largest packaged food firm, said on Wednesday it would reorganise its infant-nutrition business to improve performance, five months after the new CEO listed the category as one of its priorities for growth.

The Swiss maker of Gerber baby food and Illuma formula will appoint regional managers for nutrition to deal with local trends faster. Rival Unilever took a similar step, naming business heads for different countries.

The changes come as global consumer goods groups such as Nestlé, Unilever and Procter & Gamble are under intense investor pressure to boost profit margins as sales slow from consumers migrating to smaller, independent brands.

Infant nutrition is a key battleground for Nestlé and its rivals Danone and Reckitt Benckiser, which bought Enfamil infant formula maker Mead Johnson.

Big established brands still retain consumer trust that they have lost in other areas of packaged food, particularly in China, a major focus for future growth due to growing affluence and a new policy to allow two children per family instead of one.

Nestlé has come under pressure to shift gear from activist shareholder Third Point, which in June revealed a $3.5bn stake. Nestlé has satisfied some demands, by buying back shares and setting a margin target. Nestlé said it would manage some areas of infant nutrition globally via a “strategic business unit” for innovation, quality management, compliance and global manufacturing capacity.

“The more agile and efficient structure will enable Nestle to respond faster to rapidly changing local consumer preferences, evolving regulation, and customer and channel demand for tailor-made solutions.”

Nestlé already manages most of its businesses regionally, with the exception of a few areas, such as bottled water.