Products You May Like
Nestlé CEO Philipp Navratil’s turnaround strategy is showing signs of gaining traction after the world’s largest packaged food company delivered stronger-than-expected third-quarter sales growth, driven by improving volumes.
Nestlé reported organic sales growth of 4% for the quarter, ahead of analyst expectations for 3.4%, while real internal growth, which reflects sales volumes and product mix, reached 2.8%. Analysts had expected growth of 1.5%.
The performance marked the first quarter since 2024 in which Nestlé’s organic sales growth was driven more by volumes than higher prices, providing an important measure of progress under Philipp Navratil, who took over as chief executive in September 2025.
Navratil inherited a consumer goods group dealing with subdued consumer spending and pressure from US tariffs. He has made real internal growth central to Nestlé’s strategy, alongside a greater focus on its strongest growth opportunities and efforts to improve performance across the business.
The latest figures suggest that approach is producing results. Nestlé’s 2.8% real internal growth was almost twice the level analysts had forecast, while pricing contributed 1.1% compared with expectations of 1.9%.
The shift towards volume-led growth is significant because it suggests more of Nestlé’s expansion is being generated by consumers buying its products rather than by higher prices. After several years in which inflation forced consumer goods companies to rely heavily on pricing, sustained volume growth would provide a stronger foundation for Nestlé’s recovery.
Nestlé maintained its full-year 2026 organic sales growth forecast of between 3% and 4%. Its shares rose around 1.5% following the results and reached their highest level in three months, taking their gain for the year to more than 7%.
Navratil nevertheless made clear that he does not regard the turnaround as complete. He said he was pleased with the company’s progress but that considerably more work remained to deliver the potential of the business.
Pricing is emerging as one of the next major tests. CFO Anna Manz said Nestlé would increase prices where it could without damaging medium-term consumer penetration, with management expecting an inflationary environment to continue into 2027.
That creates a difficult balance for the leadership team. Consumers remain cautious while input costs are rising, limiting Nestlé’s ability to protect margins simply by passing additional costs on to shoppers. Maintaining volume momentum while managing those pressures will be an important measure of whether the recovery can continue.
Nestlé is also dealing with the loss of its Russian operations after Moscow seized the business in September. The company stopped consolidating the Russian unit into its financial results from the end of that month.
The Russian business contributed around 2% of group sales. Nestlé is derecognising Russian assets worth CHF1.6 billion and expects the move to negatively affect 2026 net debt by approximately CHF900 million. It is also recording a non-cash charge of around CHF1.4 billion relating to cumulative currency translation adjustments.
For Navratil, the third-quarter performance provides some of the clearest evidence yet that Nestlé’s emphasis on real internal growth is changing the company’s trajectory. The stronger volumes reinforce a recovery that had already begun to emerge earlier in the year, but maintaining that momentum as inflation and consumer pressures persist will be the more demanding test.
The turnaround is gaining credibility, but its success will ultimately depend on whether Nestlé can turn stronger volumes into sustained profitable growth while continuing to improve execution across a global portfolio of brands.