Nestlé has launched a review of its underperforming vitamins business that could lead to the divestment of some brands, the multinational said, after reporting its first-half sales volumes have grown more slowly than analysts expected.
Shares in Nestlé — the world’s biggest food producer — fell to a six-month low in early market trade, and were 4.7% lower by Thursday. As the economic downturn globally has squeezed customers and driven them to cheaper alternatives, the Swiss-based maker of KitKat chocolate bars, Nespresso coffee and Maggi seasoning has found it harder to sell its branded products.
The results add to investor pressure on CEO Laurent Freixe to revive the company’s share price and sales. Since his appointment in August last year, Nestlé’s share price has lagged rivals, including Unilever and Danone.
The Swiss company has, however, maintained its 2025 outlook, saying it expects organic sales growth to improve. It estimated an underlying trading operating profit margin at or above 16%, including the negative impact from tariffs and current FX (forex) rates.
We have launched a strategic review of our underperforming mainstream and value brands, including Nature’s Bounty, Osteo Bi-Flex, Puritan’s Pride, and US private-label [VMS business], which may result in the divestment of these brands.
— Nestlé
The brands under review in Nestlé’s vitamins, minerals and supplements (VMS) business generate about Sf1bn (R22.3bn) in annual sales, Nestlé said. VMS is part of Nestlé’s wider nutrition and health science division, which accounted for a little more than 16% of group sales in the first half, and recorded a decline in real internal growth — or sales volumes — of 0.8%.
“We have launched a strategic review of our underperforming mainstream and value brands, including Nature’s Bounty, Osteo Bi-Flex, Puritan’s Pride, and US private-label [VMS business], which may result in the divestment of these brands,” Nestlé said.
Freixe said Nestlé will focus on its global premium VMS brands, and that a potential divestment of the others could happen in 2026. “To us, the highest potential is at the premium end,” he told reporters.
Nestlé said first-half organic sales growth — which exclude the impact of currency movements and acquisitions — rose 2.9% in the six months through June, just above the average of analysts’ forecasts of 2.8%. But real internal growth (RIG) was 0.2%, below the consensus forecast of 0.4%, reflecting softer demand as customers baulk at price increases.
Total reported sales decreased by 1.8% to Sf44.2bn, compared to analyst expectations of Sf44.6bn, a drop Nestlé attributed in part to the negative impact of 4.7% from foreign exchange as the Swiss franc has strengthened this year.
Nestlé’s 2.7% price increases were above the average analyst estimate of 2.5%. “The headline will be the negative RIG of -0.3% in Q2, when most investors were positioned for a positive number,” Barclays analysts said in a note. “This will be seen as a bit disappointing.”
Despite the “negative surprise” in Nestlé’s health science unit, Vontobel analysts said the overall results would likely reassure investors that Nestlé is on the long road to recovery.
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