A marketing report and analysis of Nestle

Nestle is the leader in food and beverage industry with wide range of products which accompany consumers’ live from birth through adulthooh, from breakfast to dinner, at home and elsewhere. This, day by day, represents them as a great responsibility and commitment to quality, taste and nutrion across all their products, to touch lives in a positive way and earn customers’ trust.

They have joined into nutrion, health and wellness strategy with three fundamental beliefs:

Pleasure and health: Nutrion have great taste if it is a part of healthy balanced diet.

Eating with moderation and balance: Nestle’s products are designed to a variety of choices for every moment of the day and for all company members.

Transparent communication: Transparent is the best way to win customer’s trust. All ingredients used to produce Nestle’s products are included on the label.

With long term commitment is to enable customer an informed choices about diets and lifestyle, helping them care for themselves and their families, Nestle is really a leader in nutrion, health and wellness area.

Business generates the most revenue

Nutrion, Health and Wellness generates the most revenue for Nestle. In the recent year 2010, Nutrion, Health and Wellness confirms Nestle’s strategic direction, with main products is Food and Beverages creat 103.722 CHF millions in revenue equal to 94.53% in Total Revenue.

Nestle, 2011, Strong 2010 performance press release, http://www.nestle.com/Common/ NestleDocuments/Documents/Library/Events/2010-full-year-results/Press_Release_EN.pdf

Nutrion, Health and Wellness market, which is 100 percent right as determining from Nestle’s Board of Management in 2007, is a massive market for growing. Over 5 year operating, the industry keep fastest growing rate and contribute most revenue for corporate.

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This industry has been opened for Nestle S.A in 2007 by Brabeck Letmathe – Nestle Group’s Chairman when he produce Nestle Roadmap – a strategy to transform corperate from traditional business into Nutrion, Health and Wellness with slogan ” Good Food, Good Life “.

Business generates the most profit

Nutrion, Health and Wellness is the area that brings in for corporation the most profit.

In 2010, with EBIT rate of 13.4% equal to 13.898 CHF millions, Food and Beverages – main range of products in Nutrion, Health and Wellness area creats main income in total for corperation.

Nestle, 2011, Strong 2010 performance press release, http://www.nestle.com/Common/ NestleDocuments/Documents/Library/Events/2010-full-year-results/Press_Release_EN.pdf

Business will drive grow in the next decade

These are 4 areas provide Nestle exciting prospect for continuos growing in the next decade:

Nutrition, Health and Wellness

Emerging markets and PPP

Out-of-home leadership

Premiumisation

Nestle’s Successful

Transformation from traditional business into a nutrion, health and wellness company, that brings them to No.2 player all over the world.

Efficiently investing in value-added category.

Stronger finance and credit.

Flexible reaction to changing in strict health care standard and unfair competing.

Their global strategy and local execution help them reach almost targets in recent years.

Corperate Responsibility.

In recent years, to become a successful corperation nowadays, these are their vital programs, which have contributed not only for society but also for themself as listed:

Essential Program

Context

Action

Achievement

Rural Development

Creat positive impact on argriculture area (provide local employment, technical transforming), and evironmental development

Provide 200.000 local employments

For Nestle: profitable growth, better quality in raw material, raw material supplying guarantee

Improve standard of living, increase productivity in rural and economic in general

In 2009, they provided microfinance in amount of CHF 48 millions

For Customer: more qualified and healthier products for consumer

Minimize impact of climate change and sometime is social issues

For Society: higher quality for crop, more technical assistance, developping employment and environment, lower natural resources use, larger in yield help lower producing cost.

Creating for themsef a stable, protected and qualified raw material to guarantee shareholder value-added

Technical assistance and knowledge transfer

Water and environmental Sustainability

Produce tasting products that also have more and more lower environmental footprint by improving operational efficiacy

They have already invested over CHF 220 millions in sustainable programs during 2009

For Nestle: reduce risk concerning health care standard, reduce cost, creat long term availability of resources, profitable growth

Reduce use of water, some non-renewable energy and resources with target to reduce CO2 emissing performance and other evironmental affects

Launch more projects to reduce greenhouse affect, eliminate waste in operation

For Society: better standard of living

Promote with supplier to help them a sustainable practices in supply chain

Human Resources Dovelopment

Long term investment in training

Offer more comprehensive training, more opportunities for career

For Nestle: skilled workforce, improve performance

Continuous improving environmental and occupational health and safety management

For Society: more employment, better standard of living, higher worhplace safety standard.

Global and diversify Corperation developing

Improve health and safety performance

Increase Nestle’s engagement, employee’ health and wellbeing, reduce accident in workplace

Creating an ethical and responsible workplace

Climate Change Solution

Reinforce Nestle’s role and plan to reduce greenhouse gas emissions

Directly controlling operation

For Society: lower environment impact

Improve through supply chain

Helping Nestle’s consumer

Crisis Management

Food and beverage market is changing everyday, customer’s need put producers into circumstance that whether they adapt to new trend or left behind on the race with other competitors.

Nestle is an outstanding example in transforming their traditional managing operation into Health, Nutrion and Wellness management with Roadmap to Good Food, Good Life – a unique flexible strategy that brings them to number 2 largest company all over the world.

In Management and Strategic segment, I am pleased to express: Strategy – Nestle Roadmap’s success and Nestle’s solution for Melamine incident in China.

In the Crisis management, Melamine scandal in China is outstanding example.

– On March 15th,2008, Chinese authorities informed that their over 20 Chinese milk companies was launching products contained Melamine – this toxic has caused at least 4 babies’death and other 1253 Chinese children have fallen ill.

Suppliers have been believed to add Melamine to milk to make it higher in protein. There was some ranges of Hong Kong Nestle’s products using Chinese milk powder.

Source: http://news.bbc.co.uk/2/hi/asia-pacific/7623037.stm

After that, some press report in Hong Kong claimed a Nestle growing milk containing Melamine. Immediately, Hong Kong government requested Nestle to withdraw all their products that have been found to contain Melamine.

– The problem could have pushed them into a long-lasting downturn and other consequence concerning reputation.

– However, commented on this scandal, Peter Brabeck Letmathe – Nestle Group’s Chairman said: “Sales in China are rather being favoured…It’s rather positive than negative”

( Reporting by Devidutta Tripathy; editing by Sue Thomas ) – Ref Reuters Sep 26th, 2008

http://www.reuters.com/article/2008/09/26/nestle-idUSDEL31014820080926

– How did they react?

Yes, it is fantastic that Nestle today, after 3 years from this scandal, did not failed and become the leader in food and beverage area, the number 2 largest corperation all over the world.

The first step in chain of resolving incident was complying with authorities’ request in showing all ingredients and formular used to produce milk, they were also withdrawing some kinds of products in Hong Kong as authorities’ requests as in line with Nestle’s Corperate Business Principle.

In the mean time, they sent their samples of milk to honour testing center like Hong Kong Standards and Testing Centre Ltd., Food Industry Research and Development in Taiwan, etc. This action was conducted at places where their products have presented.

The third step, they announced government’s reports and confirmation that their products have been 100 percent safe and exact with things printed on their products’ label.

The final step in this chain, they have combine Research and Development department and Maeketing department in communication with consumer on their producing standards, products’ quality that 100 percent safe and good for health as confirm from authorities.

With this action, they have been not only winning back customer’s belief on their products, but also underlining that Nestle is the No.1 food and beverage producer all over the world with best quality and healthy products, as their slogan ” Good Food, Good Life ” .

This is really a key turning-point to help Nestle successful as today.

Strategy – Nestle Roadmap.

Source: http://www.nestle.com/Common/NestleDocuments/Documents/About_Us/Nestle_Roadmap.pdf

Nestle’s strategy is being considerred the leader in Nutrion, Health and Wellness, and reference for financial performance. That is combination between their opportunities – competitive advantages, internal strength – operational pillars, focused segment – growth drivers. This is a simple but right-targetting product from Peter Brabeck Letmathe – Nestle Group’s Chairman.

Three major elements in their strategy including:

– Internal strength – Operational pillars:

Innovation and renovation ( from active and creative workforce )

Wherever, whenever, however ( supplying capability )

Consumer communication ( one of R&D activity )

Operational efficiency

These areas will help accelerate Nestle’s operation in all key areas with excellent achievement in execution.

Focused segment – Growth drive:

Nutrion, Health and Wellness – Value-add ( a massive market for healthy product )

Emerging markets and popularly positioned products – the lower end. ( in 2011, growth scenaro in emerging market is around 170 billions US dollars )

Out-of-home consumption – Differentation

Premiumsation – the high end

This areas provide exciting prospect for growing.

Opportunities – Competitive advantages:

Unmatched product and brand portfolio

Unmatched research and development capability

Unmatched geographic presence

People culture, values and attitude

This competitive advantages come from the value chain over decades, the link between great products – efficient R&D, great people – strong value, broad geographic – entrepreneurial spirit.

This combination day by day is creating Nestle’s motivation on the road to leader in Food, Health and Wellness.

In general, Roadmap is created from the combination between competitive advantages and their own strength and a right targeting market. Roadmap is almost following three major steps in building strategy for corporate.

Analysis: determining the current position ,situation, performance and aspirations of the organisation and its members. Herein, that is competitive advantages. It help them regconize potential opportunities, their right strength that would make drive growth for Nestle in the future.

Choice: determining possible courses of action, their possible consequences, problems and difficulties, benefits and advantages. Decision making is the most important step in every company, a wrong choice means a foresee failure. On roadmap, that is drivegrowth, corperate has been right when they choose emerging markets and popularly positioned products to be their motivation in growing in the next strategic years.

Implementation: committing the organisation to pursue one of the possible future courses of action. Herein, operation pillars is a group of process to implement a lack or a small failure in the overall strategy.

Vision, Mission, Goal.

Nestle’s Vision: By bringing together all of its global R&D resources, Nestle is able to provide high quality, safe food solutions for consumers worldwide – whether this is in terms of nutrion, health, wellness, taste, texture or convenience. Above all, Nestle brings to consumers products that are of the highest quality. And safety is non-negotiable.

Werner Bauer, Chief Technology Officer, Nestle S.A.

Innovation, Technology and Research & Development

Nestle’s Mission: Their mission is creating value for shareholder and society.

CREAT SHARED VALUE

Reduce Poverty + Improve Health + Empower People

SUSTAINABILITY

Protect the future

COMPLIANCE

Laws, Business Principles, Codes of conduct

Nestle’s Goals: Being recognized the leader in Nutrion, Health & Wellness, and the industry reference for financial performance.

But how they have been motivating their employees over decades to be the leader.

Performance Compliance

All Nestle’s employees have a good knowledge that here or there, we must have responsibility for down performance in the organization.

Company have a good reward and recognization tied to performance.

Culture Building

Sustaining a high performance environment.

Maintaining and evolving Nestle’s culture based on their own principle.

Source: Creating successful future Jan 2008

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