Nestlé, the global consumer goods leader, is reshaping its strategy in China to reignite consumer demand and align more closely with local market trends following weaker than expected sales amid the country’s slowing economic growth.
“In Greater China, the organic growth decline in Q3 2025 was similar to that in Q2 as we reduce trade inventory levels and shift our focus to generating consumer pull,” said Anna Manz, Chief Financial Officer of Nestlé, during a recent earnings call.
Focusing on Health and Functionality
Nestlé is prioritizing health-oriented product categories such as pet nutrition and aging related solutions designed for the silver economy, a rapidly expanding demographic segment of consumers aged 50 and above. By 2030 an estimated 25% of China’s population will be over 60.
“Across generations, health has become a top concern. Consumers read labels carefully, try to understand ingredients and look for functional benefits,” said Kais Marzouki, Chairman and CEO for Nestlé Greater China, at the China International Import Expo. “This makes health and functional products a big opportunity for us,” he told China Daily.
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Marzouki also highlighted the huge potential in China’s coffee market despite increased competition from local players like Luckin Coffee which continue to outpace global brands such as Starbucks with competitive pricing and stronger localization.
Responding to Shifting Consumer Behavior
Nestlé’s strategic pivot acknowledges the growing challenges faced by international brands in China. Local competitors are gaining ground as consumers increasingly favor domestic products that offer better value and relevance.
A McKinsey survey cited in a WARC report found that 63% of Chinese consumers now prioritize product functionality when making purchasing decisions. This marks a significant shift from brand driven to benefit driven consumption, an area Nestlé aims to lead through innovation and marketing.
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However, brand loyalty has been declining across China with more consumers embracing local brands once dismissed as imitators. Nestlé’s renewed focus on quality, relevance and targeted propositions seeks to counter this trend and rebuild consumer trust.
Broader Strategic Challenges
Nestlé’s China transformation is part of a wider corporate restructuring under newly appointed CEO Philipp Navratil, who took the helm in September 2025. The company faces global headwinds including economic uncertainty, tariffs and underperforming markets.
“To drive growth at scale we must go beyond individual innovations,” Navratil said during the earnings call. “We need structured multi year innovation platforms supported by high quality marketing and executed through our leading global brands.”
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CFO Anna Manz also noted that Nestlé is reassessing its marketing effectiveness metrics, while Navratil confirmed that the company will increase investment in marketing efforts that deliver sustainable growth. “We just need to become the best marketers in the industry,” he said.
As part of its cost cutting and confidence restoration efforts Nestlé recently announced plans to reduce its global workforce by around 16,000 jobs.
With its renewed focus on consumer driven growth, health centric innovation and strong marketing execution Nestlé aims to strengthen its relevance and leadership in the evolving Chinese market.
Sourced from China Daily, The Star, Reuters, Nestlé, WARC
