London, July 25 (V7N) – Nestlé, the world’s largest food company, has announced a review of its underperforming vitamins, minerals, and supplements (VMS) business, which could lead to the divestment of several brands. This announcement came after the company reported slower-than-expected first-half sales growth.
 
In early trading on Thursday, Nestlé shares dropped to a six-month low, falling by 4.7% by 0950 GMT, as the company struggles to adapt to a challenging economic climate. The company attributed this slowdown to an economic downturn that has forced consumers to seek cheaper alternatives, making it harder for Nestlé to sell its branded products such as KitKat, Nespresso, and Maggi.
 
This move to reassess its VMS business comes as Nestlé’s CEO, Laurent Freixe, faces growing pressure from investors to boost the company’s financial performance. Despite a challenging market environment, Nestlé maintained its 2025 sales growth outlook, expecting organic sales to improve in the future.
 
Nestlé’s VMS business, which generates roughly 1 billion Swiss francs ($1.26 billion) in annual sales, forms part of the company’s Nutrition and Health Science division. The division accounted for just over 16% of the company’s total sales in the first half of the year but saw a decline in real internal growth (RIG) by 0.8%. This lower-than-expected performance led the company to launch a strategic review of its underperforming brands, including Nature's Bounty, Osteo Bi-Flex, Puritan's Pride, and U.S. private label brands. As part of this review, Nestlé is considering the possibility of divesting these brands by 2026.
 
Slow Sales Growth and Price Increases
Nestlé’s first-half results showed a modest organic sales growth of 2.9%, slightly above analysts' forecast of 2.8%. However, real internal growth (RIG), a key measure of sales volume, was just 0.2%, falling short of the forecasted 0.4%. This indicates softening demand as customers resist price hikes. The company’s total sales fell by 1.8% to 44.2 billion Swiss francs, below the expected 44.6 billion francs, with foreign exchange factors contributing a 4.7% negative impact.
 
Price increases, averaging 2.7%, were above the 2.5% anticipated by analysts. Barclays analysts expressed disappointment with the weaker-than-expected RIG, which they noted would likely result in investor concerns. Despite these challenges, Vontobel analysts noted that the overall results should reassure investors that Nestlé remains on a recovery path.
 
Nestlé’s challenges reflect broader market trends as companies struggle to balance rising prices with consumer demand for value, especially amid global inflation and shifting economic conditions.
 
News source: Reuters.........
 
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