Nestlé, the world’s largest packaged food company, has announced sweeping workforce reductions of 16,000 employees over the next two years as new Chief Executive Philipp Navratil moves aggressively to restore profitability amid cooling cocoa prices and rising geopolitical supply risks in Ivory Coast.
The restructuring, announced Wednesday during Nestlé’s nine-month results presentation, marks Navratil’s first major decision since taking the helm in September following the abrupt departure of predecessor Laurent Freixe. The job cuts comprise 12,000 white-collar positions across the group and 4,000 reductions in manufacturing and supply chain operations, representing approximately 5.8 percent of Nestlé’s workforce of around 277,000 employees globally.
Navratil framed the moves as necessary adaptation to shifting market conditions. “The world is changing, and Nestlé needs to change faster,” he stated, emphasizing that decisions, though difficult, are essential for accelerating efficiency and restoring shareholder value. The restructuring targets cost savings of three billion Swiss francs by 2027, increasing Nestlé’s previous target of 2.5 billion francs and signalling intensified focus on operational streamlining.
The timing carries particular significance for cocoa-dependent businesses. Nestlé reported nine-month results showing organic growth of 3.3 percent with reported sales falling 1.9 percent to 65.9 billion Swiss francs, though confectionery posted 8 percent organic growth led by KitKat. Analysts interpreted the job cuts as evidence that Nestlé is making hard choices between investing in premium, margin-rich categories like chocolate whilst trimming operational overhead amid escalating cocoa and commodity costs.
The cocoa sector itself is entering a critical transition phase. The nine-month real internal growth (RIG) result stood at 0.6 percent with pricing accounting for 2.8 percent, underscoring how much of recent growth has come from price increases rather than volume gains as consumers resist higher costs. Spot cocoa prices have declined approximately 23.7 percent month-on-month and 23.5 percent year-on-year from record highs earlier this year, though inventories at US ports remain tight at 1.88 million bags, potentially providing some price support.
However, emerging political instability in Ivory Coast, the world’s top cocoa producer accounting for roughly 40 percent of global supply, threatens to reintroduce supply chain volatility that traders and chocolate manufacturers have not confronted since the 2020 election crisis.
Ivory Coast will hold a presidential election on October 25 with President Alassane Ouattara seeking a controversial fourth term, whilst prominent opposition figures including former President Laurent Gbagbo and main opposition leader Tidjane Thiam have been excluded from the ballot. On October 11, security forces violently dispersed a peaceful opposition protest in Abidjan, using tear gas and mass arrests that resulted in at least 237 people detained, including journalists and political activists.
Ivory Coast’s two main opposition parties have called for daily nationwide protests ahead of the October 25 election, after their leaders were barred from contesting. The escalating political tensions revive painful memories of the 2010 election crisis, when port deliveries halved amid violence that ultimately claimed approximately 3,000 lives.
At least 16 people were killed in inter-communal violence in southern Ivory Coast in recent weeks, with analysts warning that clashes are likely to break out in various parts of the country during and after the vote. Commodity traders monitoring Abidjan’s ports closely recognise that any disruption to cocoa shipments could quickly reignite price volatility and supply chain anxiety across the chocolate industry.
For Nestlé and peers, the challenge involves balancing operational efficiency against emerging commodity supply risks. The company’s leadership reshuffle signals management’s determination to restore growth momentum after five years of underperformance. Analyst Bernstein noted that quarterly results “add fuel to the turnaround fire,” naming the headcount reduction as a “significant surprise” whilst highlighting that third-quarter real internal growth rose 1.5 percent, well above analyst expectations of 0.3 percent.
Yet the cocoa sector’s structural vulnerabilities persist. Global production is forecast at approximately 4.84 million tonnes in 2024/25, up 7.8 percent year-on-year, marking the first surplus in years. However, legacy supply-side threats including ageing cocoa trees, illegal mining operations, and disease pressures in West Africa remain unresolved, potentially limiting yield improvements despite better rainfall patterns.
The Nestlé restructuring announcement sparked investor confidence, with company shares rising approximately 8 percent in early trading following the results presentation, suggesting markets view the cost-cutting discipline as overdue corrective action. Yet the success of Navratil’s turnaround strategy will partly depend on whether cocoa price stability prevails through and beyond the Ivory Coast election.
