Balancing Core Strengths and New Product Development

For years, this platform has championed the idea that sustained business success hinges on maintaining a steady pipeline of new products. Innovation, we’ve argued, is the lifeblood of any thriving company—attracting new customers while reinforcing loyalty by showcasing cutting-edge leadership.

Yet a recent Financial Times article (May 24, 2025) prompted a reassessment of this relentless innovation framework. The piece featured Laurent Freixe, Nestlé’s new CEO, who succeeded Mark Schneider in August 2024. Under Schneider, Nestlé pursued aggressive diversification, acquiring businesses in food allergy treatments and fitness supplements to pivot toward healthier, higher-margin categories. However, this strategy now appears to have backfired: growth slowed as consumers shifted toward cheaper alternatives, and critics argue Nestlé’s core businesses—coffee, pet care, and food—were neglected in the process.

Freixe acknowledges that packaged food sales have stagnated for nearly a decade amid rising demand for healthier options. Yet he contends that Nestlé’s established categories benefit from consistent consumption frequency and market leadership. His strategy prioritizes relevance and competitiveness over expansion for its own sake. “If you put all your emphasis on developing new spaces, you will weaken the core,” Freixe warns. “Losing share from the core and weakening the fabric of the organization is not a winning proposition.” His approach favors pragmatism over ambition, ensuring Nestlé’s foundational brands remain robust before chasing new frontiers.

The debate isn’t black and white. While protecting a company’s core—its cash cow and brand equity—is essential, stagnation poses its own risks. Refreshing core products can mirror new product development, extending their lifecycle without venturing into unfamiliar territory. At the same time, selectively augmenting the core with high-potential innovations (like health-focused foods) can future-proof the business.

The key takeaway? Balance. Companies must nurture their core while judiciously exploring new opportunities—without letting either priority undermine the other. Nestlé’s pivot under Freixe offers a compelling case study in strategic realignment.