Nestle is sharpening its focus on nutrition, pet care and healthy aging in China, while accelerating local product development, strengthening domestic sourcing and adopting artificial intelligence to revive growth in its second-largest market.
The Swiss food and beverage giant is seeking to capitalize on changing consumer preferences as Chinese shoppers increasingly balance demand for premium products with a greater emphasis on affordability, Kais Marzouki, CEO of Nestle China, said in an interview during the China International Import Expo in Shanghai.
Nestle's China business is "getting back into positive territory", he said, pointing to progress in adjusting its operations and product portfolio to a rapidly evolving market. The company reported organic sales growth of 4.2 percent in China in the third quarter of 2026, comprising real internal growth of 3.7 percent and a 0.5 percent contribution from pricing.
Marzouki said, "I don't think we see the situation in the Chinese market as smooth sailing. It is still going through ups and downs, and we are still going through a transformation."
Sustaining the recovery will depend on Nestle's ability to translate changing consumer preferences into products that offer stronger value and meet increasingly diverse needs.
"The Chinese market is changing and evolving very fast," Marzouki said. "It is up to us to keep up, fully understand consumers' evolving needs, address them, and provide the right value through the products we offer."
He described a market where demand for premium products coexists with a growing emphasis on affordability.
Consumers continue to seek higher-quality food and beverages, including products that allow them to recreate restaurant and coffee-shop experiences at home. At the same time, the expansion of discount retailers and specialist snack chains reflects a stronger focus on value for money.
Domestic brands are also intensifying competition in the premium segment, bringing fresh product ideas and a deeper understanding of local consumer preferences.
Nestle is responding by upgrading existing products and developing new offerings that combine taste, convenience, nutritional benefits and affordability, Marzouki said.
Pet care is among the company's key growth priorities, supported by the increasingly important role pets play in Chinese households.
Marzouki said consumers are treating pets more like family members, driving demand for higher-quality pet food and related products.
Nutrition and healthy aging represent another major opportunity as China's demographic changes create demand for products tailored to different life stages.
Consumers are increasingly seeking food and beverages with specific nutritional benefits, including protein-rich products and offerings designed to address particular health and dietary needs.
Coffee and healthier snacks also present opportunities for expansion.
In the snacking category, the rapid growth of specialist retailers is giving consumers more choices, while younger shoppers are becoming more health-conscious without abandoning their appetite for indulgent products.
For Nestle, the opportunity lies in developing products that combine enjoyment with improved nutritional profiles, while maintaining the affordability and convenience consumers increasingly expect.
Beyond its product portfolio, Nestle is accelerating the adoption of artificial intelligence and digital technologies to improve efficiency and responsiveness across its China operations.
The company is exploring applications in demand planning, procurement, manufacturing and supply chain management, with the aim of responding more quickly to changes in consumer purchasing patterns.
One potential application involves linking actual consumer sales data more closely to production decisions, allowing the company to adjust output based on demand rather than relying primarily on forecasts.
The company also sees opportunities to use AI to improve consumer engagement by delivering more relevant product information and personalized offers.
"We talk about 'China speed'; with AI in China, I think things will become even faster," he said.
Strengthening local sourcing is another priority as Nestle seeks to navigate volatile ingredient prices, supply chain disruptions and geopolitical uncertainty.
Nestle operates 22 factories and operating bases in China and manufactures more than 90 percent of the products it sells in the country, according to Marzouki.
The company is also working with domestic suppliers to improve quality, strengthen production capabilities and secure reliable supplies at competitive costs, reducing its dependence on imported raw materials.
"It is absolutely key for us to secure our supply," he said.
Marzouki said China remains strategically important not only as a major consumer market but also as a source of innovation, operational expertise and new business opportunities for the group.
"Our destiny as a company is also in China," he said.
