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Swiss food conglomerate Nestlé will separate its water and premium beverages into a standalone business, the company said Tuesday morning.

Why it matters: The move is part of new CEO Laurent Freixe's broader overhaul to improve growth at the Swiss food conglomerate.

The big picture: It's also part of a larger trend by CPG companies to divest brands that are either slower growing or don't share synergies with the rest the portfolio.

Zoom in: The beverage business will be headed by Nestlé Waters Europe chief Muriel Lienau, starting January 1.

It includes Perrier, S.Pellegrino, Pure Life and Acqua Panna.

The company also plans to cut costs by CHF 2.5 billion ($2.8 billion) and increase advertising and marketing spend to 9% of sales by the end of 2025.

Flashback: Freixe replaced CEO Mark Schneider, whose focus on health care plus weak sales led to his exit.

Nestlé's Waters was the focus of a French mineral water investigation in 2023, but agreed to a €2 million fine to put an end to it.

What they're saying: "In the medium term, organic sales growth is expected to be at 4% plus in a normal operating environment, with an underlying operating profit margin 17.0% plus," the company said in a statement.

It also confirmed 2024 guidance, with organic sales growth of about 2%, an operating profit margin of around 17% and flat earnings in constant currency.

Nestlé to separate water business into standalone company

The move is part of a larger cost-cutting strategy to improve the Swiss conglomerate's growth.

Clear plastic bottles of Nestle-branded Pure Life water.

Photo: CFOTO/Future Publishing via Getty Images

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Swiss food conglomerate Nestlé will separate its <a class="gtmContentClick" data-vars-link-text="water and premium beverages" data-vars-click-url="https://www.axios.com/2024/08/23/charted-nestl-makes-change-at-the-top-closer" data-vars-content-id="d74b03a9-96e7-4b21-9ebd-c95924e1bc8e" data-vars-headline="Nestlé to separate water business into standalone company" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2024/08/23/charted-nestl-makes-change-at-the-top-closer" target="_self">water and premium beverages</a> into a standalone business, <a class="gtmContentClick" data-vars-link-text="the company said" data-vars-click-url="https://www.nestle.com/media/pressreleases/allpressreleases/capital-markets-day-2024" data-vars-content-id="d74b03a9-96e7-4b21-9ebd-c95924e1bc8e" data-vars-headline="Nestlé to separate water business into standalone company" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.nestle.com/media/pressreleases/allpressreleases/capital-markets-day-2024" target="_blank">the company said</a> Tuesday morning.Why it matters: The move is part of new <a class="gtmContentClick" data-vars-link-text="CEO Laurent Freixe" data-vars-click-url="https://www.reuters.com/business/retail-consumer/nestle-cut-more-costs-step-up-marketing-under-ceo-freixe-2024-11-19/#:~:text=Nestle%20also%20said%20that%20it,%2C%22%20Vontobel%20analyst%20Bertschy%20said." data-vars-content-id="d74b03a9-96e7-4b21-9ebd-c95924e1bc8e" data-vars-headline="Nestlé to separate water business into standalone company" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.reuters.com/business/retail-consumer/nestle-cut-more-costs-step-up-marketing-under-ceo-freixe-2024-11-19/#:~:text=Nestle%20also%20said%20that%20it,%2C%22%20Vontobel%20analyst%20Bertschy%20said." target="_blank">CEO Laurent Freixe</a>&#x27;s broader overhaul to improve growth at the Swiss food conglomerate.

Nestlé to separate water business into standalone company

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