Nestlé Shifts from Scale to Execution Discipline: Coffee and Petcare Stand Out in Investment

Nestlé, one of the world's largest food and beverage companies, is moving away from managing growth solely through scale, price increases, and acquisitions. The new approach emphasizes better management of existing brands, accurately reading consumer demand, and concentrating investment in high-growth potential categories.

According to FoodNavigator's analysis dated September 9, 2026, the company's priority is now "real internal growth," meaning accelerating real volume and product mix growth adjusted for price effects. Nestlé CFO Anna Manz stated in her remarks at the Barclays Global Consumer Conference that the company has achieved RIG-focused growth for four consecutive quarters, and that this growth forms the basis for margin and cash generation.

Nestlé's own 2026 half-year results support this direction. The company reported 1.8% RIG and 3.7% organic growth in the second quarter, announcing its goal to exceed 2% RIG in the medium term.

The Same Investment Period Ends for Every Brand

One of the most notable changes in the new strategy is the unequal distribution of investments across the portfolio.

While Nestlé previously approached its vast brand portfolio with similar performance expectations for different parts, it is now being more selective. Areas with high growth potential, such as cold coffee, ready-to-drink coffee, and therapeutic pet nutrition, are receiving more resources.

The frequency of performance evaluations has also changed.

The company now monitors growth platforms quarterly instead of annually. This allows for quicker visibility into which brand or category is truly generating growth, enabling investment distribution to be reshaped accordingly.

This approach represents a significant shift for large F&B companies.

As the portfolio grows, each product receiving the same budget and marketing support can lead to resource dilution. The new model emphasizes distributing investment based on return potential rather than the number of brands.

Media Investment Reduced from 400 Brands to 120

This selectivity is more visible on the marketing side.

According to FoodNavigator, Nestlé is reducing the number of brands it actively invests in from approximately 400 to 120. This does not mean that the remaining brands will be left completely unsupported.

As illustrated by Anna Manz's example of Carnation, some brands can operate more efficiently with in-store promotions, activations, or trade marketing rather than large media campaigns.

This distinction is also meaningful for F&B businesses.

Not every product may need a social media campaign, influencer budget, or large advertising investment.

While some products may receive strong communication support as "hero products" that attract customers to the business, others may support menu profitability or complementary sales.

Investing according to the product's actual role rather than distributing the budget equally across every product may be more efficient.

Coffee is No Longer Just a Hot Morning Beverage

Coffee holds a central position in Nestlé's new growth strategy.

The company reshaped its organization around four core business areas: Food & Snacks, Coffee, Nutrition, and Petcare in February 2026. Among these, Coffee and Petcare are seen as leading drivers of long-term growth.

The opportunity in coffee is not limited to traditional hot coffee consumption.

Nestlé views cold coffee, RTD products, functional beverages, and new consumption moments aimed at young consumers as growth areas. Products like Starbucks Refreshers Concentrate are examples of efforts to move coffee beyond being solely associated with breakfast.

This strategy is also noteworthy for coffee businesses.

Increasing coffee consumption may not solely rely on selling more espresso. Developing products for different parts of the day, such as afternoon, post-workout, or on-the-go consumption, can grow the total category volume.

Growth Driven by Market Share, Not Economy

Nestlé's assessment of emerging markets is also striking.

It is noted that growth in Latin America, Southeast Asia, and Africa is not solely driven by economic expansion. The company particularly associates growth in markets like Brazil, Mexico, and the Philippines more with market share gains.

This distinction is important.

Growth in total consumption of a market can benefit all brands. However, if a company increases sales without market growth, it means it is taking share from competitors.

The path to this often involves better distribution, the right product, strong pricing, innovation, and field execution.

In other words, Nestlé emphasizes the thesis of "we can gain share in the existing market through better execution" rather than the approach of "if the market grows, we grow too."

Expanding Distribution in China Was Not Enough

One of the most instructive examples of the new strategy is China.

Recently, Nestlé has been simplifying its distribution model based on reaching more cities and points of sale in China. Due to weak demand and category performance, excess inventory is being reduced, the sales organization is being downsized, and the number of SKUs on shelves is being decreased.

The focus is now not just on placing products in more locations but on creating real consumer demand.

This approach is directly applicable to HORECA businesses as well.

Expanding a restaurant or café's menu does not always mean more sales. As the number of SKUs increases, stock complexity, waste, purchasing burden, and staff training also rise.

If consumer demand is concentrated on a few strong products, simplifying the menu and enhancing the service, quality, and communication of these products may yield higher efficiency.

Issues in North America Are as Much About Execution as Demand

Nestlé's assessment of North America explains why the strategy is centered around the word "execution."

Although the region accounts for about one-third of the company's sales, RIG remained flat in the second quarter. Manz indicated that she did not find this performance acceptable, while not attributing the issue solely to weak consumer demand.

Frozen food, Gerber infant nutrition, and Coffee Mate operations are among the specific problem areas.

The message here is clear: even in a challenging economic environment, internal execution issues should not be hidden behind the excuse of "the market is bad."

This approach is also valid for restaurant and hotel management.

Before attributing the entire sales decline to weakened consumer spending, one should examine the menu, pricing, service speed, product availability, staff training, and channel performance.

Cost Savings Are Reinvested in Growth

Nestlé's transformation is not just a sales growth program.

The company announced that it has achieved cumulative savings of 1.7 billion Swiss francs under the Fuel for Growth program in its 2026 half-year results and is progressing towards a year-end target of 2 billion francs.

The goal of the savings is not just to increase profit margins but to create resources that can be reinvested in growth areas.

The ratio of advertising and marketing expenses to sales has also risen to 8.9%. The company describes this as an approach of "more and better investment."

This balance is crucial.

If cost reduction only leads to shrinking budgets, product quality and sales potential may suffer. Saving from inefficient areas and investing in strong products represents a different model.

Portfolio is Also Being Streamlined

Nestlé is also sharpening its portfolio around four core business areas.

In its 2026 half-year results, the company announced that processes are underway to convert its premium beverages and waters business into a 50% joint venture, sell mainstream vitamin-mineral-supplement activities, and divest its ice cream business.

In contrast, the remaining shares of the smart food brand yfood were acquired while Blue Bottle Coffee was divested.

These decisions indicate that the company is moving away from the equation of "growth = acquiring more brands."

According to FoodNavigator, major transformational acquisitions are not a priority at this stage. Nestlé aims for more organic growth, margin, and cash generation from its existing businesses first.

Artificial Intelligence Could Be the New Gateway in the Acquisition Journey

Another noteworthy area in Nestlé's strategy is artificial intelligence.

The company is tracking what questions consumers are asking about their categories in AI tools and to what extent Nestlé brands are seen as sources in AI responses.

This approach goes beyond traditional SEO.

If consumers start asking AI questions like "which protein coffee should I buy?" or "which snack is suitable for my child?" instead of using search engines, the brand's visibility will not solely depend on advertising budgets.

Reliable product data, scientific content, and a robust digital information infrastructure will also become important.

For F&B brands, this means that digital product information is increasingly becoming part of the marketing infrastructure.

What Can HORECA Businesses Learn from This Strategy?

Nestlé's scale cannot be compared to that of a restaurant or coffee chain. However, the fundamental logic of the strategy can be applied regardless of business size.

Firstly, not every product has to have the same investment rights.

Secondly, the reason for a sales decline is not always the market; it could be product availability, service quality, incorrect pricing, or operational errors.

Thirdly, if performance is monitored more frequently than once a year, unnecessary long-term resource allocation to underperforming products can be avoided.

Fourthly, the size of the portfolio or menu is not a competitive advantage in itself. If complexity increases and execution quality decreases, a smaller but stronger product portfolio may be more efficient.

Stafflink's View

The most significant change in Nestlé's strategy is the clearer acknowledgment of the difference between "being big" and "managing well."

In our view, this approach is becoming increasingly important in the HORECA sector as well.

A multitude of products, branches, or brands can create an illusion of growth; however, if stock, training, service, and marketing resources do not develop at the same pace, scale can work against the business.

Nestlé's selective investment model is based on a simple question: which products are truly generating growth and which are merely occupying space in the portfolio?

A similar question is valid for restaurants, cafés, and hotel F&B operations.

In the upcoming period, strong businesses are likely to be those that do not necessarily manage the widest menu or the most locations, but those that can allocate the right resources to the right products and implement them consistently.