It wasn't the fast track. When Peter Brabeck-Letmathe joined Nestle (NSRGY) back in 1968, the young Austrian's first job was selling and delivering ice cream. Every morning, he would drive a freezer truck around the Alps to supermarkets and cafes. After two years, he received his first foreign assignment--in Chile, then run by a Marxist and heading toward a bloody coup d'etat. Brabeck helped Nestle's operations avoid nationalization. Later, he became manager in Venezuela and Ecuador, where he turned around a subsidiary by closing factories and laying off more than half of the staff. "I learned to manage through turmoil," he says.
Compared with these dramas, the 57-year-old Brabeck is making Swiss-style corporate restructuring look like a cakewalk. In three years as Nestle's chief executive, he has jettisoned mature businesses, slashed costs, and focused investment on fast-growing fields. Margins have jumped from under 9.9% to 12.2%. The company's market capitalization has tripled, to close to $100 billion. That's quite an achievement in a world where food prices are flat or falling, and major brands such as Coca-Cola (KO) and Kellogg (K) are struggling. "My job," says Brabeck, "is to take an athlete who can run the 100 meters in 10 seconds and improve it to 9.8 seconds."
Nestle's sprinting speed underscores many of Europe's corporate strengths: its ability to create multinationals that cross cultural borders and turn unspectacular-sounding products, such as bottled water and pet food, into solid profit-turners. "My actions may sound slow in Silicon Valley," Brabeck admits. "But they are fast for a company with factories in more than 80 countries and products that are sold in every country in the world--even in North Korea."
Other European food businesses, particularly Unilever (UL) and Danone (DA), are embarked on a similar path. But Nestle is the largest of the three, with $47 billion in annual sales, 224,000 employees, and 8,000 brands ranging from candy bars to baby formula. "Brabeck has taken a company that is a collection of fiefdoms and turned them into an effective, single global company," says Sylvain Massot, an analyst at Morgan Stanley Dean Witter in London.
Brabeck decided on a career with Nestle as a path to a larger stage beyond his native Austria. "When I was growing up, career opportunities depended on your status in a political party, because 75% of the Austrian gross domestic product was state-owned," he recalls. He epitomizes Nestle's polyglot culture. Brabeck's wife, an interior designer, is Chilean. He speaks Spanish at home with her and their three grown children. He's also fluent in French, Italian, Portuguese, and English.
His favorite business language is discipline. When he took over Nestle, he began selling off such slow-growth units as Findus frozen foods and Hills Brothers coffee. He focused investment in more promising fields, such as bottled water and pet food. In January, Brabeck spent $11 billion to buy Ralston Purina Co., the leading pet-food maker in North America.
Brabeck's other strategic goal is transforming Nestle from a set of far-flung operations into a single global machine. He has inked a $200 million deal with SAP to link its five e-mail systems and permit Nestle's headquarters in Vevey, Switzerland, to know for the first time how many raw materials its subsidiaries buy, in total, from around the world. The company then will be able to negotiate better contracts with suppliers and centralize production. Last year alone, Brabeck closed 38 different factories. All told, he has slashed $1.6 billion in costs, without labor strife.
That's the man's style--not flashy, but effective. There are no dress-down days at Nestle, and the chief executive favors dull gray suits. A broad-shouldered man with the ruddy complexion of a mountain climber, he loves hiking in the Swiss Alps, which rise just behind his office at Nestle's headquarters. Scaling a giant like Nestle requires a long, tough climb. But Peter Brabeck-Letmathe is turning out to be an expert mountaineer.