Nestlé appears to be entering a phase of strategic consolidation, a move that may involve taking some financial pain in the near term. According to reports, the global food and beverage conglomerate, in collaboration with Morgan Stanley, is conducting a strategic review of its subsidiary, Blue Bottle Coffee. A complete divestment is among the options being considered. This potential sale represents more than a simple portfolio adjustment; it signals a clear shift in direction under CEO Philipp Navratil, indicating a correction of the aggressive expansion strategy pursued in prior years. The central question for investors is whether the company is demonstrating the discipline to cut its losses.
A Clear Shift in Corporate Focus
This development aligns with a broader, more stringent restructuring agenda being implemented by Nestlé’s leadership. The company acquired a majority stake in the premium coffee chain back in 2017, valuing Blue Bottle at approximately $700 million at the time. Current market assessments suggest that any sale today would likely occur at a significant discount to that original valuation, resulting in a potentially substantial write-down.
Despite the prospect of a loss, financial experts interpret this potential divestment as a positive strategic signal. The apparent goal is to move capital and management attention away from the capital-intensive and operationally complex business of running physical retail cafes. Instead, the focus is returning to Nestlé’s core strength: building and marketing scalable consumer brands. The rationale for this restructuring is multifaceted:
Should investors sell immediately? Or is it worth buying Nestle?
- Core Business Reinforcement: Resources are being directed toward strengthening powerhouse global brands like Nescafé and Nespresso, rather than operating a chain of coffee shops.
- Profitability Protection: The company is seeking to separate business segments that exert pressure on overall profit margins.
- Brand Rights Strategy: Speculation suggests Nestlé may sell the physical cafe operations while retaining the potentially lucrative rights to distribute Blue Bottle products through retail channels.
Market Sentiment and Share Performance
The equity market has historically rewarded management teams for demonstrating the discipline to shed underperforming assets, even when such moves incur short-term costs. Nestlé’s shares are currently reflecting a cautious, wait-and-see approach among investors.
Trading at 86.15 euros, the stock is positioned slightly above its 50-day moving average of 84.77 euros. The technical picture suggests stability, further supported by a Relative Strength Index (RSI) reading of 51.3, which indicates the equity is neither in overbought nor oversold territory. A stance of “cautious optimism” seems to prevail while the share price remains below its 52-week high of nearly 95 euros.
Should Nestlé execute a clean exit from Blue Bottle Coffee without massive write-offs, it could significantly bolster confidence in the leadership’s restructuring capabilities. However, until final details of any potential transaction are formally announced, the stock is likely to continue trading within its recent range.
Ad
Nestle Stock: Buy or Sell?! New Nestle Analysis from December 2 delivers the answer:
The latest Nestle figures speak for themselves: Urgent action needed for Nestle investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from December 2.
Nestle: Buy or sell? Read more here...
