ZURICH, Switzerland (AFP)—Nestle’s sudden sacking of its chief executive over an office relationship gives the Swiss food giant a chance to reset and return to its strengths, industry analysts said Tuesday.

The multinational behind Nespresso coffee capsules and KitKat chocolate bars announced late Monday it had dismissed Laurent Freixe with immediate effect over an “undisclosed romantic relationship with a direct subordinate”.

The company veteran had only been in post since September 2024, a year in which Nestle saw its revenue decline by 1.8 percent to 91.35 billion Swiss francs ($113.66 billion).

And in late July this year, Nestle reported a 10.3-percent drop in first half profits as it struggled to turn around its fortunes amid sluggish consumer spending in China, even as it passed on higher cocoa and coffee prices to consumers.

As the share price declined, Freixe was tasked with reviving sales by emphasising the group’s flagship products.

In a swift move announced after the Swiss markets closed on Monday, Nespresso CEO Philipp Navratil was appointed to take over from Freixe by his fellow board members.

After initially dropping more than 3.5 percent after trading began on Tuesday, Nestle shares recovered ground and closed down 0.74 percent on the Swiss stock exchange at 74.93 Swiss francs.

The SMI index overall was down 0.72 per cent.

– ‘Good Swiss compromise’ –

The change at the top could lead to paralysing uncertainty, said Patrik Schwendimann, an analyst at Zurich Cantonal Bank.

“But in a positive scenario it could accelerate Nestle’s return to its strengths,” he said.

Navratil is “a good Swiss compromise” between his two predecessors, with Mark Schneider meant to bring in a “breath of fresh air from outside”, and his successor Freixe a return to “tried-and-tested Nestle recipes”.

“Philipp Navratil should bring a breath of fresh air from within.”

Andreas von Arx, an analyst at Baader Helvea, said that Freixe’s return to the “Nestle of old” model had received a mixed review from investors, and wondered if his departure was now “a chance for real change”.

“We would hope that the new CEO now finally has the ambition to tackle category/product problem issues, where we see the reasons as more structural, and less as temporarily/mismanagement,” he said.

Born in 1976, Navratil started his career with Nestle in 2001 and had various roles in Central America before taking over responsibility for global strategy and innovation for the Nescafe and Starbucks brands in 2020.

The Swiss and Austrian national became chief executive of the Nespresso brand in July last year.

– Track record in coffee –

“Navratil has a decent execution track record in coffee, which is Nestle’s biggest business,” said Jon Cox, an industry analyst with the Kepler Cheuvreux financial services company.

“He needs to deliver on the turnaround plan and return Nestle to its traditional mid-single digit growth and annual margin improvement model.”

Nestle owns more than 2,000 brands, including Purina dog food, Maggi bouillon cubes, Gerber baby food and Nesquik chocolate-flavoured drinks.

The multinational has suffered a series of setbacks, including a bottled water scandal that began in France in 2024 and the deterioration in sales in the wake of the wave of inflation.

Jean-Philippe Bertschy, an analyst at Swiss investment managers Vontobel, said that by promoting Philipp Navratil, Nestle was banking on a leader from the next generation of the group’s executives.

“We know Philipp as exceptionally straightforward, ambitious, and relentlessly focused on results. One of his first priorities will be to pull Nestle out of its current cycle of negative headlines,” he said.