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The clash between Nestlé and activist investor Daniel Loeb is emblematic of the need for change at big consumer goods companies.

Despite Nestlé’s massive market share and numerous successful brands, investors are concerned that the Swiss giant is not keeping up with its peers. On June 25 New York-based Daniel Loeb, Chief Executive of hedge fund Third Point, communicated this unrest in the form of a letter. In it he criticised Nestlé’s “staid culture and tendency towards incrementalism”.

Few would argue that the CPG sector, driven mainly by changing consumer tastes and technology, is well into a period of transformation. Big, older companies like Nestlé can no longer dominate through a ubiquitous presence in stores and TV ads. None can afford to ignore the need to succeed online and meet demand for healthier food. Facing stiff competition from smaller brands, large incumbents in the packaged food sector are scrambling to improve profits but cutting costs.

Adding to the pressure is the success that private-equity firm 3G has had by slashing costs at companies such as Anheuser-Busch and Kraft Heinz. Investors may debate the long-term effects of these cuts on growth, but as The Economist explains, “3G has indisputably set a new bar for how profitable ageing consumer companies can be.”

Nestlé is making changes, but it is taking a different approach from 3G, says CFO François-Xavier Roger. It is cutting costs, but has not set a target for profit margins, opting instead to reinvest in long-term growth. Ulf Mark Schneider, Nestlé’s CEO since January, has also scrapped a long-term sales model and announced a review of the company’s American confectionery business. Shortly after Loeb’s letter, Nestlé announced a $21 billion share buy-back program, and said it will invest in high-growth categories, such as coffee and pet food, to counter slowing growth in packaged food.

Third Point, now Nestlé’s eighth-largest shareholder, generally agrees with these steps, but wants more urgency. Thus Loeb is expected to ask for more, including a review of Nestlé’s portfolio of more than 2,000 brands to offload weaker ones, and the sale of its 23% stake in French beauty-products firm L’Oréal. Eyeing a target of 18-20% margins by 2020, Loeb above all wants higher productivity and discipline on spending, including cuts to Nestlé’s bureaucracy.

Loeb’s actions came months after Unilever fended off a takeover by Kraft Heinz. Chief Executive Paul Polman, a former Nestlé executive, was able to quell investor concerns by announcing many of the same changes Third Point is recommending for Nestlé. These included the goal of a 20% margin by 2020. What they did not include was a complete reinvention – and Kraft Heinz’s stock has risen 40% since the start of the year.

Analysts expect Nestlé to either set or hint at a long-term margin target at its September 26 investor seminar, where Schneider will lay out his plans.

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