(Bloomberg) — Nestlé SA is turning to the executive who runs its Nespresso coffee empire to try and steady the world’s largest food business after it was rocked by the second CEO firing in a little over a year.
Philipp Navratil is taking over as chief executive officer at the Swiss company, after the exit of Mark Schneider for underperformance last year and Laurent Freixe on Monday for failing to disclose an affair with a direct subordinate.
Read More: Nestlé Ousts CEO Over Office Affair and Taps Nespresso Boss
It’s unprecedented turmoil for a company that has been renowned for its internal succession planning and staid corporate culture.
Freixe’s ouster “has left us shocked,” RBC analysts including James Edwardes Jones said in a note. “We thought of him as a Nestlé lifer who would restore the company’s reputation of slightly boring predictability. How wrong we were.”
The quick reshuffle raises the question of why Nestlé immediately appointed a permanent internal CEO, “instead of taking time to conduct a full assessment of internal and external candidates,” Jefferies analysts said.
Nestlé’s shares fell 3.6% early Tuesday before paring some of the drop.
Now investors’ eyes are on Navratil, a company veteran of more than 20 years who at the age of 49 could conceivably run the maker of KitKat chocolate bars for a decade or more. He joined Nestlé in 2001 and has spent much of his career in central America including Mexico, with a focus on the coffee business.
He later ran the group’s global coffee unit, overseeing the Nescafé brand and the license agreement with Starbucks Corp., which analysts see as one of Nestlé’s most promising businesses. He became CEO of Nespresso, the maker of coffee machines and single-use capsules, in July 2024.
Navratil’s appointment, along with Nestlé’s change of chairman next year, is “the real generational step that should probably have happened 12 months earlier,” Baader analyst Andreas von Arx said in a note.
Even so, the Swiss and Austrian national faces skepticism about whether he can reboot a company whose shares have slumped over 40% since their early 2022 peak. The slide, which began under Schneider, had been Freixe’s job to reverse.
But the ex-CEO’s efforts came to an abrupt end after an investigation found Freixe had violated Nestlé’s code of conduct, according to a release late Monday. He will not receive an exit package, a spokesperson said.
The matter was first brought to company officials’ attention through an internal system called “speak up,” according to a person familiar with the situation who asked not to named. After the allegations couldn’t be substantiated via an initial probe, further concerns were raised via the internal system and an investigation with external counsel was launched, the person said.
Commenting on his new role, Navratil said he will “fully embrace the company’s strategic direction” — a clear signal he’ll continue Freixe’s strategy of boosting spending on advertising, betting on fewer but bigger product initiatives and getting rid of underperforming units.
Read More: Nestl é Weighs Sale of Vitamin Brands After Volumes Decline
He inherits ongoing restructuring including the potential sale of struggling vitamin brands, and finding a potential partner for Nestlé’s bottled water business, which Freixe separated into a standalone unit.
“We are disappointed that the CEO is boxed in for now to follow his predecessor’s strategy at a time where the market is doubting the outcome,” JPMorgan analyst Celine Pannuti said in a note.
Some of Nestlé’s challenges are beyond its direct control. While Freixe often noted about 90% of its US-sold products are made domestically and are therefore outside the scope of President Donald Trump’s tariffs, a key exception is Nespresso’s Swiss-made coffee capsules. They now face a 39% levy.
It’s a business Navratil knows well, at least.