By Brian Blackstone and Saabira Chaudhuri
ZURICH -- NestlÚ SA on Monday named Ulf Mark Schneider -- the head of a European health-care company -- to be its new chief executive, in a surprise move that underscores the increasing emphasis on health and nutrition from the owner of Kit Kats, Perrier and DiGiorno frozen pizza.
Mr. Schneider, chief executive of Germany-based Fresenius SE & Co., will succeed current CEO Paul Bulcke, whom NestlÚ's board proposed as the company's next chairman after Peter Brabeck-Letmathe retires from that position next year.
While Mr. Bulcke -- who has been at NestlÚ nearly four decades -- was widely expected to succeed Mr. Brabeck-Letmathe, another NestlÚ lifer, the appointment of Mr. Schneider as CEO came as something of a surprise.
Many investors and analysts had expected 150-year-old NestlÚ to stick with tradition and name one of several strong internal candidates -- including the head of its Asia, Oceania and Africa zone, Wan Ling Martello; head of business excellence, Chris Johnson; and head of the Americas, Laurent Freixe -- as the next CEO.
SociÚtÚ GÚnÚrale analyst Warren Ackerman described the appointment as "a breath of fresh air," saying Mr. Schneider "will bring something new to the table and reinforce NestlÚ's credentials in health and wellness."
Under Mr. Bulcke, NestlÚ over the past eight years has been expanding its nutrition-and-health-sciences arm, a business both investors and employees believe could be a game changer.
Mr. Schneider is seen as a strong person to lead NestlÚ through its journey of becoming a more health-focused foods company because of his experience leading Fresenius over 13 years. The company generates annual sales of EUR28 billion ($31 billion) and offers products and services for dialysis, hospitals and outpatient treatments.
Its stock price has more than quadrupled in the past decade under Mr. Schneider.
"The board has increased the company's capabilities to accelerate NestlÚ's journey to become the world's pre-eminent player in the Nutrition, Health and Wellness sector," said Mr. Brabeck-Letmathe in a statement.
NestlÚ said Monday it plans to integrate its health sciences business and its skin health arm into the main NestlÚ organization so that they both report directly to the CEO starting next year.
The 50-year-old Mr. Schneider is seen as relatively young leader for the consumer goods industry, with Mr. Ackerman noting that his age positions him well to lead NestlÚ for a sustained period.
A German and U.S. citizen, Mr. Schneider has a doctoral degree from the University of St. Gallen and an M.B.A. from Harvard Business School.
He will join NestlÚ on Sept. 1 to give Mr. Bulcke a few months to hand over the reins; he will begin as CEO on Jan 1.
The succession announcement comes as NestlÚ has struggled with weak sales growth in recent years. The company has been hurt by the strong Swiss franc, slowdowns in major markets like China and Europe and weakness in consumer prices.
NestlÚ has missed its sales target of organic growth of 5% to 6% -- dubbed the "NestlÚ Model" -- for three years running, raising questions about its long-term growth prospects. Its recall of Indian noodle brand Maggi and subpar results for a Chinese brand of peanut-flavored drinks and canned rice porridge added to NestlÚ's woes.
The company has launched a cost-cutting program while saying it will keep investing in areas like coffee, pet care and health sciences where it believes it has an edge over rivals.
Write to Brian Blackstone at firstname.lastname@example.org and Saabira Chaudhuri at email@example.com