VEVEY, Switzerland - Nestle, the world's biggest food company and a major employer in Europe, plans to recruit 20,000 young people as the continent grapples with a youth unemployment crisis that is sapping consumer confidence.
Laurent Freixe, Nestle's Europe boss, presented the plan on Thursday in Brussels to Employment Commissioner Laszlo Andor as European Union leaders gathered for a summit set to focus on tackling youth unemployment.
"Governments cannot solve the problem alone," he said in an interview at Nestle's headquarters in Vevey, Switzerland. "In the context where Europe is ageing and indebted, Europe needs its youth at work. We need to replace the generation of the babyboomers when they retire." Nestle plans to offer jobs to 10,000 people under the age of 30 by 2016 and create a further 10,000 traineeships and apprentice positions. It will also push its 63,000 suppliers to follow suit, and offer the new hires coaching and mentoring.
"Hopefully we will inspire other businesses to be part of the solution," he said. "By investing in Europe, by growing in Europe, we believe we can do something that is good for our business but also which is good for society at large." The maker of KitKat chocolate bars and Nespresso coffee employs about 100,000 in Europe, where it makes about a third of group sales which rose to 92 billion Swiss francs (S$125.7 billion) in 2012. It added 3,000 jobs in 2012 In Europe and offered 2,000 traineeships and apprenticeships.
About 5.6 million young people are officially unemployed in the European Union, with the youth jobless rate at 23 per cent.
Freixe said Nestle did not plan to increase total headcount by 10,000, as some of the young people would be replacing those retiring, while others would be hired due to investments in new plants announced in recent months, including in Germany, Spain, France and Britain.
Noting unemployment in Spain and Greece was higher than that reached in the United States during the Depression of the 1930s, he said young people from struggling southern Europe would be offered positions in the healthier northern economies. Nestle would also continue to hire older, experienced staff.
"Everyone has got a relative, a friend who is affected. It affects the entire society," he said. "Everyone is anxious. It is no surprise that nine out of 10 of the most pessimistic countries are in Europe." Nestle in April reported a disappointing 4.3 per cent rise in first-quarter sales, as growth slowed in emerging markets and as Europe saw a cold spring hit consumption of bottled water and ice-cream. A scandal involving horse meat being found in some prepared food items also dented sales of ready meals.
Freixe said poor weather and consumer sentiment continued to weigh, although the impact of the horse meat scandal was starting to fade.
"In terms of weather impact, the second quarter was no better than the first, maybe even worse because we didn't have spring time," he said. "Consumers start to feel strongly the cumulative impact of all the austerity measures." A French national, Freixe, 51, joined Nestle sales and marketing in 1986 and led the company's operations in Hungary, then Spain and Portugal, before taking over the Europe region just as the economic crisis hit in 2008.
Freixe said the protracted economic weakness was changing consumption behaviour, accelerating a polarisation of the market, with demand growing for both low-price products and premium offerings such as Nespresso and Purina pet food.
He said Nestle had kept growing in Europe through the crisis by responding to those trends, both by offering smaller, more affordable packets of its favourite brands and by investing in high-end products like Dolce Gusto coffee.
"Southern Europe will remain very challenging, but I see opportunities in most geographies. Of course it will be easier to grow in Russia than in Spain and in Italy," he said.
Nestle reports first-half results on Aug. 8. Its shares are trading at 16.9 times forward earnings, according to Reuters data, a slight discount to rivals Unilever and Danone , which have also been hit by the economic crisis in Europe.