Nestlé SA’s new chief executive, Philipp Navratil, has wasted no time in reshaping the world’s largest food company, announcing sweeping changes that include slashing 16,000 jobs globally—about 6% of its workforce—amid efforts to streamline operations and boost profitability. The moves come just weeks after the abrupt dismissal of former CEO Laurent Freixe, who was ousted over an undisclosed romantic relationship with a subordinate, as detailed in a Reuters report from early September. Navratil, previously the company’s finance chief, stepped into the role and immediately signaled a no-nonsense approach, emphasizing automation, cost-cutting, and a “performance mindset” to reverse sluggish growth.

In a recent earnings call, Navratil described the layoffs as essential for creating a leaner organization, with plans to automate processes and eliminate redundancies, particularly among white-collar professionals. This restructuring is part of a broader “Fuel for Growth” initiative aiming to save 3 billion Swiss francs by 2027, up from an earlier target of 2.5 billion, according to updates from Yahoo Finance. The CEO’s message to employees was stark: the company must “change faster” in a volatile market, with ruthless assessments of talent and a focus on high-return investments in innovation.

A Shift Toward Automation and Efficiency

Industry insiders note that Nestlé’s challenges stem from years of underperformance, including weak organic sales growth—the slowest in over two decades—as consumers balk at repeated price hikes. Navratil’s strategy pivots toward real internal growth, prioritizing categories like pet care and coffee over less profitable segments. Posts on X (formerly Twitter) reflect mixed sentiment, with some users decrying the job cuts as prioritizing profits over people, while others see it as a necessary pivot for a company facing competitive pressures from rivals like Unilever and Procter & Gamble.

The layoffs, set to unfold over the next two years, will be conducted with “respect and transparency,” Navratil assured, but the scale—impacting 16,000 roles worldwide—has sparked concerns about morale and execution. A Newsweek article highlighted how this fits into a pattern of corporate belt-tightening in the consumer goods sector, where automation is increasingly replacing human labor to combat inflation and supply-chain disruptions.

Leadership Turmoil and Strategic Overhaul

The backdrop to these announcements is the scandal that led to Freixe’s exit. Staff complaints about favoritism prompted an internal probe, revealing the hidden relationship, as reported by Reuters in September. This leadership vacuum allowed Navratil to ignite what he calls a “turnaround fire,” demanding smarter decision-making and accountability across the board. In his first public comments, covered by FoodNavigator, he called for the company to operate “better, smarter, and faster.”

Nestlé’s third-quarter results, which beat expectations with a 2.4% sales increase, provided some validation for the new direction, but analysts warn of risks. The emphasis on cost savings could stifle innovation if not balanced carefully, especially in emerging markets where Nestlé derives significant revenue. X posts from business commentators, such as those noting the company’s push into AI and genetic engineering under previous leadership, underscore ongoing debates about ethical practices in food production.

Investor Reactions and Future Implications

Shareholders have responded cautiously, with Nestlé’s stock fluctuating amid the news. The CEO’s harsh tone—warning that underperformers won’t have a place in the revamped organization—echoes broader industry trends toward leaner, tech-driven models. A HR Grapevine piece detailed how this cultural shift demands a “performance mindset,” potentially alienating long-term employees but attracting talent focused on agility.

Looking ahead, Navratil’s playbook draws from successful turnarounds at peers, but execution will be key. With plans to divest non-core assets and ramp up marketing in high-growth areas, Nestlé aims to reclaim its edge. Yet, as global economic uncertainties persist, including inflation and geopolitical tensions, the company’s ability to balance cost-cutting with sustainable growth will determine if this harsh reset pays off. Insiders suggest that while the immediate pain of layoffs is evident, the long-term vision could position Nestlé as a more resilient player in the packaged foods arena.