Michel Mersch (Nestlé): ‘Sustainable investments more than pay for themselves’

With over 2,000 brands, Nestlé is the largest food company in the world. Like all players in the food industry, the multinational faces a number of challenges: rising raw material prices, challenges in the supply chain, changing consumer trends, and a growing demand for sustainability. This led to a new strategy in 2024. Nestlé intends to focus on profitable categories and phase out or divest less successful activities. ‘Sustainability remains our license to operate,’ Mersch tells Tobias Hoering, partner at Kearney, who specializes in the food industry.
Mersch joined Nestlé more than 25 years ago as a key account manager and subsequently held various management positions. In 2018, he became CEO of Nestlé Belgilux. Since April 2025 he has, in addition to Belgium and Luxembourg, also been responsible for the Dutch market.

You have completed your first 100 days as CEO Benelux. What were your priorities?
‘First, I immersed myself in the Dutch market. I also got to know my Dutch colleagues. I want to build a good relationship with them, which is why I spend a lot of time in Amsterdam. My first mission is to integrate the teams in Belgium, the Netherlands, and Luxembourg into one team. In doing so, I want to keep an eye on the cultural differences. We are in the middle of that process.’

How do you go about creating more synergy while also taking local differences into account?
‘For finance functions, it was obvious to merge them for the entire Benelux region. But for some brands or products, such as coffee, for example, that was less obvious. Because the market strategy differs per country or because the business is more mature in one country.
The size of the market is also a determining factor. Merging two different markets risks focusing on one of them. We have explored what we can tackle jointly and what we cannot. Our starting point remains the local consumer. Even though we have a joint Benelux organization, we expect our teams to continue to understand and leverage the unique dynamics of each market.’

What are the main differences between Dutch and Belgian consumers?
‘Dutch consumers are slightly more sensitive to sustainability and are more critical of greenwashing than Belgian consumers. The Dutch are also more open to new food technologies, such as cultured meat or plant-based products. Belgians are more conservative in this regard.
There are also similarities. Consumers across Europe are price-sensitive, especially in these times. Incidentally, we do not see differences as a problem, but as an opportunity. We ask how we can turn the problems to our advantage. This applies not only to consumers, but also to how we view diversity and inclusion within our organization. It is exactly the same approach: differences create potential.’

What does it take to successfully capitalize on these differences?
‘I strongly believe in the strength of our people. We work in an international organization with many processes and procedures. These are necessary, but they can be limiting. I want to encourage people to make the most of their abilities and show entrepreneurship. Within Nestlé, there is a strong focus on these two elements.’

How do you encourage entrepreneurship within your team?
‘For me, it starts with trust. Employees only demonstrate entrepreneurship if they feel their manager trusts them. I am consciously working on that. I like to give employees the space to take initiative, within the framework of our organization, of course. For example, I find it important that specialists take the lead on certain projects – they are the experts, after all.’

What does that require of your leadership style?
‘I strive for transparency and encourage responsibility. When sensitive issues arise, I believe it is important to discuss them openly with the colleagues involved and share our opinions. I also want us to tell the truth when an NGO approaches us with critical questions. We believe in what we do, even though not everything we do may be perfect. That is why we must dare to be vulnerable and not shy away from criticism. That is scary and may go against our nature, but ultimately it earns respect and trust, both within the company and outside. It also helps us move forward as a company. If you never acknowledge that you sometimes make mistakes or could have done things differently, you can never improve.’

Nestle's global strategy was renewed in 2024 and has since focused more explicitly on organic growth rather than acquisitions. Certain brands have even been divested. How do you translate that strategy to the Benelux market?
‘After the change of course, we asked ourselves how we can create more value for customers in the short term. We chose to invest heavily in segments where we were already strong and had a competitive advantage. It concerns two categories, namely coffee, and pet food. This last division has grown by double digits in recent years, although that is leveling off somewhat this year. Coffee has also experienced strong growth. Nestlé's decision to divest brands also had an impact on the Benelux market. For example, Wunda, the plant-based dairy brand based on yellow peas, disappeared.’

Coffee and cocoa prices are currently high and are expected to rise further. How do you arrive at a good price? Consumers are already feeling the effects of higher food prices, while at the same time Nestlé wants to invest more in marketing and sustainability - that seems like a dilemma to me.
‘We strongly believe in responsible pricing. If everyone in the chain can earn a fair income, this will lead to stable costs in the long run. After all, it ensures farmers have room to invest, making the chain stronger and less volatile. For example, they can experiment with coffee plants that are more resilient to climate change.
Sustainability also plays a role. We value affordability, but we do not necessarily strive for the lowest price. An excessively low price can lead to more food waste, for example. This is particularly significant in Europe. We also chose not to fully pass on all additional costs to the consumer. To remain profitable, we looked for ways to cut costs and made some important efficiency improvements. We also temporarily reduced the marketing budget. In retrospect, that was not the best decision, as marketing is crucial for stimulating growth. We will be investing more in marketing again.’

Can you give examples of cost savings you have implemented?
‘We streamlined our production lines and improved our packaging. In the supply chain, we never let trucks drive empty anymore. We also centralized departments such as HR. It is not necessary to have the same structures in every country.
But it is also about simple things. Our offices are closed on Fridays, and employees work from home. The cafeteria remains closed, and all the electricity is turned off. All in all, this leads to lower costs and contributes to our sustainability goals.’

Sustainability is often seen as a cost item. Do you agree?
‘In the short term, sustainability does involve additional costs. In the medium and long term, however, that investment pays for itself many times over. Take regenerative agriculture, a method that aims to restore and strengthen nature, and not just to use the land. We already know that this form of agriculture is more resilient than traditional agriculture. In the long run, yields will fluctuate less, with a positive effect on pricing.’

How do you prevent sustainable initiatives from being seen as greenwashing?
‘Thanks to discussions with the ACM, the Netherlands Authority for Consumers and Markets, we have learned not to use vague terms such as responsible or green. The message was: make it concrete. That is what we are doing now. For example, we provide figures on the impact of making cocoa cultivation more sustainable - how many children were able to go to school, how many trees were planted, and how many families received a better income. In addition, we have our progress measured by external agencies. We score high on these sustainable, independent rankings.’

If we zoom in on the discussion about the environmental impact of coffee capsules, they often end up in the waste stream. Will this problem be solved in the future?
‘In the Netherlands, consumers can return used capsules to a Nespresso store. About twenty percent of people do so. But that is not enough. Next year, we will launch a countrywide recycling system, which is quite unique. Waste processing companies will then retrieve our capsules from household waste. This involves a new technique that allows consumers to simply throw their capsules away with the rest of their waste. We can recycle all types of capsules – paper, aluminum, plastic – equally well. That is a major improvement. The system has been in operation in Belgium for over two years now.’

How has Nestlé embraced artificial intelligence in the Benelux?
‘Within the Nestlé Group, we have developed our own tool, Nes-GPT. This allows colleagues to use the language robot in a secure environment. We teach our people to use AI as a tool to retrieve data more quickly, to create summaries, devise scenarios or to provide creative input. We have organized training sessions, workshops, and competitions to share the best prompts. As a result, we are now among the most active users of AI tools within the Nestlé Group – we have even been number one in terms of adoption for months. We are also in the process of introducing co-pilot applications.’

Nestlé offers products that cannot necessarily be labeled as healthy, such as chocolate, ice cream, and ready-to-eat snacks. At the same time, consumers are increasingly paying attention to their diets. How is Nestlé responding to this health trend?
‘A piece of chocolate or a snack will not do any harm, as long as you eat consciously and in moderation. Eating something tasty can contribute to people's mental well-being. Aside from that, we are improving our products. We are reducing the salt and sugar content and cutting down on fats. We are striving for fewer ingredients and fewer additives like artificial flavorings, which should lead to clean label products. We also support systems such as Nutri-Score, which allows consumers to see at a glance how healthy a product is within its category. For example, through improved production, we have upgraded our plant-based products from a C to a B rating. People often forget that we have a broad portfolio. In addition to snacks and chocolate, it also includes baby nutrition, nutritional supplements, and medical nutrition for patients with conditions such as heart or kidney disease, for example.’

When we speak again in three years, what do you hope to have achieved?
‘I hope that, together with our team and stakeholders, we will have made a demonstrably positive impact on society. And above all, that it will be recognized that our organization strives for both economic value and social added value.’

Interview by Tobias Hoering, partner at Kearney. Published in Management Scope 08 2025.