The Greatest Transformations: Focus Is Replacing Scale
- Julio Hernandez
- Mar 2
- 2 min read
And for CPG and consumer goods companies still running on conglomerate logic, the window to reposition is closing faster than most boards realize.
For 30 years, CPG rewarded expansion. More categories. More SKUs. More countries. Bigger meant safer. The logic made sense in a world where shelf space was the moat, supply chains were the differentiator, and distribution breadth was the barrier to entry.
That era is closing.
Nestlé, a ~$100B global food and beverage giant, is doing something that would have been considered heresy two decades ago: it is shrinking to grow. Water in separation. Ice cream in advanced divestment. Nutrition consolidated. Four engines prioritized: Coffee, Petcare, Nutrition, Food & Snacks.
This is not portfolio hygiene. It is structural capital discipline, and the distinction matters enormously for how you read what comes next.
The Numbers Behind the Move
Strategy without data is a press release. Here is what Nestlé's repositioning actually looks like in the numbers:
The translation: complexity is being converted into cash flow. Every divestiture is not an admission of failure, it is a deliberate redeployment of capital toward platforms where Nestlé has structural advantage and the consumer tailwind to sustain it.
Nestlé Is Not Alone
When the largest player in a sector reorients its entire capital structure, it is worth looking at who else is moving in the same direction. In this case, the answer is: nearly every major player in global consumer goods.
This is not a coincidence. Across industries, the same conclusion is emerging at the board level: conglomerate comfort is expensive, and capital concentration wins.
Why This Is Happening Now
Capital markets have changed the math. In a higher-rate environment, cost of capital is real again. Businesses that drag down return on invested capital can no longer hide behind portfolio averaging. Investors have become far more precise in separating the parts of a business that create value from the parts that dilute it.
Complexity has a real cost at execution level. Running 40 categories across 80 countries means split management attention, diluted marketing investment, fragmented supply chain logic, and slower decision cycles. The overhead required to coordinate that complexity quietly erodes the margins that diversification was supposed to protect.
The consumer has become more specific, not less. Purchasing behavior across health, pet, coffee, and premium food has become identity-level. Brands that stand for something precise win loyalty that broad-based brands cannot replicate. The category that tries to be for everyone ends up owned by no one.
The new leadership test is not how many categories you manage. It is whether you have the courage to exit the ones that dilute returns. This is not about cutting. It is about choosing.
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