Dan Loeb, Hedge Fund Billionaire Criticizes Nestle’s Strategy

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Nestle, the Swiss-based multinational food giant company, which has a total net market value of around USD 235 billion, was criticized by the top hedge fund manager, Dan Loeb. Loeb stated that Nestle’s unordered, coherent and confused strategy was a wasteful effort to keep up the game. He also stated that in Nestle’s approach, there is a lack of urgency to keep up with the competition.

On Sunday, Loeb wrote a letter to the top management about the wrong approach the company is taking and missing a lot of trends, opportunities, and their overly complex organization, which is affecting the company’s profitability and sales. A year ago, Third Point, the activist fund, took around USD 3.5 billion making claims that it would push company for a new strategy, which would lead the company to make profits at a stronger pace. Since then, the company has taken steps to improve its position among the competition; steps such as taking off 20 of US candy brands from the US which were not doing well at all and more measures were taken. But unfortunately, instead of measures taken and changed approached, the sales grew just to 2.4% in 2017, in last two decades, the company has not seen such a slowest pace.

Loeb mentioned in his statement that Nestle is taking measures in a slow pace and in small steps. He also shows concern about the doubt that the company could consistently meet the growth targets. He points out that company does not appreciate changing shifts in the consumer behavior, which is hampering its future.

Nestle in a statement released by the company says management and boards are taking a decisive and swift course of action to deliver results and welcoming inputs from the shareholders.

Loeb suggested the company to get segmented into three divisions—beverages, groceries, and nutrition. He also recommended Nestle to sell out the non-strategic, weak, underperforming brands and should focus on the core businesses.

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