Being a company of its scale and influence, Nestlé has rarely escaped scrutiny – but the last two years have been particularly testing for the Swiss major.
From leadership shake-ups through litigation and its biggest product recall in history, Nestlé has increasingly had to defend its reputation alongside its business priorities. For a company that’s also in the midst of an efficiency drive – comprising portfolio and operational optimisation, and a renewed marketing and branding push – that’s not a small task.
But with the immediate impact of the infant formula recall petering out, attention has shifted back to business.
CEO Philipp Navratil plans to focus on four broad categories – coffee, petcare, nutrition, and food and snacks – with ambitions resting on the company’s most successful brands to achieve the desired 2% RIG-led growth. Execution would largely be down to developing multi-year innovation pipelines and strategic consumer platforms, mirroring the CEO’s approach while at the helm of Nespresso.
But investors have rightly asked: is Nestlé’s scale getting in the way of performance? The Swiss major owns over 2,000 brands globally – and inevitably, there are underperformers. The company’s 18 ‘underperforming cells’ delivered 40 basis points of organic growth in Q3 FY2025, lagging the 60 basis points achieved by businesses favoured for growth investment. The 18 cells account for 20% of Nestlé’s sales, so rebalancing the portfolio or divesting strategically would likely be crucial in the long run.
The Swiss major is offloading the remainder of its ice cream business into its successful JV Froneri, and is reportedly closing in on a stake sale in Waters. The direction is already shaping up: the question is, which brands could be next?
Where Nestlé could cut next
Nestlé’s dairy brands – such as Coffee Mate, Carnation, Nido and La Lechera – have enjoyed a stable if often quiet existence in the company’s global portfolio. Many of these brands are traditional and well-established, but arguably lack the shine of billion-dollar platforms like KitKat and Nespresso.
Coffee Mate is likely the most recognisable one to the mainstream consumer. It’s the best-selling powdered coffee creamer in North America, where it’s been expanded into cold foam and liquid creamer formats as younger consumers drive growth in fun, affordable at‑home coffee occasions. Last year, Nestlé opened a new liquid creamer production plant in the US – a clear sign that the brand remains a priority for the business.
On the other hand, legacy brands such as Carnation, La Lechera and Nido largely generated revenue thanks to their long-standing positions on international markets.
This makes them stabilising forces – which is no small feat in a fickle consumer market – but the reading is less generous when framed under Nestlé’s strategy towards a more streamlined, platform-dominated portfolio. R&D and marketing investment directed at these legacy brands has been scarce in recent years, making it plausible that they may form part of a portfolio pruning.
Culinary brands such as La Lechera, Milkmaid and La Laitière, may fall in the same bucket. These brands are solid performers in emerging markets and in Europe, with revenue generation bound to habitual use and brand equity, rather than transformational innovation and platform-friendly propositions.
And it makes sense that Nestlé would look at Milk Products and Ice Cream as a source of simplification. The category delivered CHF ~9.7bn in 2025, around 10.8% of Nestlé group sales, making it non-core, particularly after the exit from ice cream is completed.
In terms of where category revenue sits group-wide, it’s larger than waters and comparable to confectionery in scale – but below coffee, petcare, nutrition & health science. Organic growth was modest and was pricing- rather than volume-led, reflecting limited growth headroom.
And beyond milk, there are some dairy-adjacent brands that could also be considered dispensable.
Legacy beverage brands may be on borrowed time
Nestlé’s Powdered and Liquid Beverages generated roughly double the revenue of Milk Products last year, yet it contains brands that have been all but forgotten in the modern functional and performance-based consumer landscape. Nesquik, Ovaltine and Nescau carry the same sense of heritage and tradition – qualities that would benefit from reinvention.
That doesn’t mean powdered beverages are out for the Swiss major.
Last year, Nestlé released a high-protein SKU under Milo, the Australian legacy powdered beverage brand. Available in both RTD and powdered formats, Milo Pro can be “conveniently enjoyed on the go by those looking to fuel their passion for sports and adventure,” says Nestlé. However, the focus here is less on the category than on the functionality – and while the company has found a way to position Milo within the health and active space, Nesquik, Ovaltine and Nescau are more closely tied to indulgence.
There may be scope for Nestlé to reposition some of these legacy brands alongside more on‑trend propositions to bring them back into the limelight. Equally, the company may opt to retire them or continue to quietly deprioritise them.
What is clear, however, is that the group’s growth ambitions would benefit from further portfolio optimisation – and that has to come from somewhere.
