Nestlé investor calls for greater focus on food and nutrition

Nestlé investor Daniel Loeb has lobbied the company to focus more on food and nutrition by encouraging the brand to sell its stake in beauty brand L’Oréal and other “ill-fitting businesses”, in a letter addressed to the company’s investors.

Loeb is the head of hedge fund Third Point, which bought a 1.25% stake in Nestlé worth $3.5 billion last June.

Nestlé has been under increasing pressure to rejuvenate growth since Third Point’s investment, and a more defined business strategy will help the brand achieve this, according to Loeb.

Loeb claims the company should be focusing on health and wellness, with a heightened focus on categories such as coffee, water and nutrition, rather than products such as frozen pizza and ice cream.

The address follows the brand’s recent sale of its US confectionary business to Ferrero for $2.8 billion, and Loeb aims to further streamline Nestlé’s operations in the future.

Nestlé currently holds a 23% stake in French beauty brand L’Oréal, and Loeb claimed it is: “Simply unclear how owning a minority stake in a beauty business makes Nestlé a stronger ‘nutrition, health, and wellness’ company.

“We continue to believe that this financial investment ought to be monetised and that there are better uses for this capital.”

Loeb reiterated his support for new CEO Dr Mark Scheinder, but stated: “We hope now that Schneider has completed his first year and there is new blood on the board, the company is able to move with greater alacrity.”

Loeb added that he wants the brand to accelerate its $20.8 billion share buyback programme.