Hedge fund manager Dan Loeb: Nestlé ‘overly complex, lethargic’; ‘missing too many trends’
(FinancialPress) — Dan Loeb, a big-time hedge fund manager, is not impressed with Nestlé‘s performance.
Loeb finds that the multinational food corporation is taking a “muddled strategic approach“ — one that is preventing the Kit Kat manufacturer from keeping up with new trends and competitors.
“Nestle’s insular, complacent, and bureaucratic organization is overly complex, lethargic, and misses too many trends,” he said in a letter directed at the company‘s management, published last week.
The billionaire‘s activist fund is Third Point. The fund acquired a $3.5 billion stake in Nestlé 1 year ago. At the time, the goal was to push for a new strategy to bolster profitability and sales volume.
Loeb pulled no punches, continuing to state that “The Company has been woefully late to participate in some of the key new trends that have driven growth in food and beverages, allowing incipient brands and more focused competitors to capture market share. Even without internal innovation, Nestlé’s growth might have been faster if the Company had adopted a more aggressive approach to acquiring fast-moving smaller brands.“
Nestle‘s 2017 sales were lagging, logging a weak 2.4% growth. The increase was the lowest in over two decades. Investors have taken notice, and the company‘s stock has devalued 8% in 2018.
The letter continued to state that while Third Point recognizes that there are real changes being implemented by Nestlé, they are too slow and small – which makes it doubtful that they‘ll be able to consistently meet its targets with its current product portfolio.
“We are concerned that Nestle does not fully appreciate the rapidly occurring shifts in consumer behavior that threaten its future,” he added.
Third Point has since published a website called NestleNOW, where investors can find the letter in full and a 34-page presentation aimed to press the issue on the Swiss company.