How is Nestlé Transforming its Procurement Strategy?

Nestlé has released its 2025 annual review during its 159th Annual General Meeting, offering insights into how the world's largest food and beverage company is transforming its procurement operations and supply chain management.

Operating across 187 countries with more than 2,000 brands, the company's sourcing strategies and supplier relationships have become central to its business transformation efforts.

On 16 April, Nestlé held its AGM in Lausanne, Switzerland, where the annual review was approved.

The document reveals how procurement and supply chain considerations are shaping the company's financial performance, business transformation and sustainability progress across its vast global network.

Business transformation through supply chain

As of the end of 2025, Nestlé's portfolio composition reflects significant procurement implications, with powdered and liquid beverages representing 28.1% of sales, requiring complex ingredient sourcing networks. PetCare brands account for 20.6% of sales, while nutrition and health science products make up 16%, each demanding distinct supplier partnerships and procurement strategies.

During 2025, Nestlé's procurement teams focused on supporting growth in coffee, pet care and nutrition and health business areas. Coffee, the company's largest business encompassing Nescafé, Nespresso and Starbucks brands, required enhanced sourcing capabilities to support regional expansion. The company worked on increasing its capacity for faster regional distribution to meet growing demand for cold coffee in Asia, which could indicate strengthened supplier relationships and optimised logistics networks in the region.

In the pet care sector, where Purina leads the North American market, procurement strategy has evolved to support partnerships with veterinary suppliers. The company is leveraging its research and development capabilities alongside sourcing teams to develop pet food addressing multiple health conditions including obesity and diabetes, which could require specialised ingredient suppliers.

Pablo Isla, Chairman of the Board at Nestlé, says: "Strong corporate governance is the foundation of our company and its future success. Our goal is to continuously strengthen our effectiveness by regularly appointing new independent directors with diverse areas of expertise.

"Our focus is on driving real internal growth, fostering a performance culture and transforming the company to make it more efficient and digitally empowered.

"We are acting with a new sense of urgency and, through our efforts, are generating savings for reinvestment."

Expansion through strategic sourcing

Nestlé is expanding its procurement footprint in healthcare nutrition, targeting growth in vitamins, minerals and supplements, active nutrition and medical nutrition categories. These specialised product lines could require the company to develop new supplier relationships and sourcing channels.

The Health Science division provides medical nutrition for patients who cannot consume food orally, using data on patient preferences to guide procurement decisions around familiar food ingredients and plant-based alternatives. This approach could suggest closer collaboration between procurement teams and suppliers to source innovative ingredients.

In 2025, sales of Compleat real food tube-feeding solutions increased by approximately one third. This growth could indicate successful procurement and supply chain operations supporting optimised marketing, use of influencers, communications with healthcare professionals and campaigns in the medical community.

Sustainability in sourcing and suppliers

Nestlé aimed to reduce its greenhouse gas emissions by 20% by 2025 and aims to further reduce them by 50% by 2030, on the path to net zero. In 2025, it achieved a 24.5% net reduction in greenhouse gas emissions against its 2018 baseline, which could suggest significant procurement shifts towards lower-emission suppliers and sustainable sourcing practices throughout its supply chain.

Nestlé has been collecting data-driven consumer insights to create innovation pipelines, which could influence procurement decisions around emerging trends including modern cooking, new flavours and textures, frequent small meals and nutrition goals across life stages.

For example, the company launched Milo Pro in response to growing popularity of high-protein foods and beverages, with three times more protein than traditional Milo drinks. This product development could require procurement teams to source higher concentrations of protein ingredients from suppliers.

Stefan Palzer, Chief Technology Officer at Nestlé, says: "We are leveraging our expertise across categories to develop a global approach to recipe and material specification.

"By complementing this with digital tools, we are becoming more efficient, while ensuring safety, compliance and preference."

Going forward, Nestlé is planning to unlock resources needed for investment at scale by generating efficiencies and cost savings by the end of 2027, which could involve procurement optimisation and supplier consolidation strategies. The company is expanding the scope of its growth platforms from 10% to 30% of its sales, expected to deliver high single-digit growth, requiring robust supply chain capabilities.

Philipp Navratil, CEO of Nestlé, says: "In 2025, we laid a strong foundation for long-term success. As we look ahead, accelerating our progress will be essential to achieving our ambitious financial and sustainability goals.

"The next few years at Nestlé will be marked by change, and our future is promising. I am confident that with our people, capabilities and brands, we are well-positioned to succeed."