Symbiosis Institute of Management Studies

(Defense Personnel and Their Dependents)

Constituent of Symbiosis International University

-Submitted to Dr Vivek Sane

Research Paper
On
NESTLE

Submitted by:
Swapna Panigrahi C44
CONTENTS

1. Introduction
2. Nestle : History
3. Business Overview
4. Nestle: Its Product
5. Competitors
6. Marketing Strategies
7. Swot Analysis
8. Recommendations
9. Conclusion
10. Bibliography
INTRODUCTION
Nestlé is a Swiss transnational food and beverage company headquartered in Vevey, Vaud,
Switzerland. It has been serving us for more than one hundred and thirty years. It has
differentiated itself from others through its high quality product mix and positioned itself as
health and nutrition Company while targeting the health conscious people throughout the
world.
Nestle’ firmly believes that the most important thing for a business company is an
understanding of their successful performance among the other competitors in market
place. In this assignment, I will further discuss about Nestlé’s company profile, its history,
competitive environment and its SWOT analysis in all aspects such as their general
environment, industry environment, competitors and scan the opportunities/threats of the
company.

NESTLE : HISTORY
1866-1905
In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable to
breastfeed. His first success was a premature infant who could not tolerate his mother's
milk or any of the usual substitutes. People quickly recognized the value of the new product,
after Nestlé's new formula saved the child's life, and soon, FarineLactée Henri Nestlé was
being sold in much of Europe.

1905-1918
In 1905, Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s,
the company was operating factories in the United States, Britain, Germany and Spain.
World War I created new demand for dairy products in the form of government contracts.
By the end of the war, Nestlé's production had been doubled.

1918-1938
After the war, Government contracts dried up and consumers switched back to fresh milk.
However, Nestlé's management responded quickly, streamlining operations and reducing
debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the
Company's second most important innovation.

1938-1944
Nestlé felt the effects of World War II immediately. Profits dropped from $20 million in 1938
to $6 million in 1939. Factories were established in developing countries, particularly Latin
America. The war helped with the introduction of the Company's newest product, Nescafe,
which was a staple drink of the US military. Nestlé's production and sales rose in the
wartime economy.
1944-1975
The end of World War II was the beginning of a dynamic phase for Nestlé. Growth
accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings
and soups. Crosse & Blackwell followed in 1960, as did Findus (1963), Libby's (1971) and
Stouffer's (1973). Diversification came with a shareholding in L'Oréal in 1974.

1975-1981
Nestlé's growth in the developing world partially offset a slowdown in the Company's
traditional markets. Nestlé made its second venture outside the food industry by acquiring
Alcon Laboratories Inc.

1981-1995
Nestlé divested a number of businesses 1980 / 1984. In 1984, Nestlé's improved bottom line
allowed the Company to launch a new round of acquisitions, the most important being
American food giant Carnation.

1996-2002
The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and
world markets developed into more or less integrated trading areas. Since 1996, there have
been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston
Purina (2002). There were two major acquisitions in North America, both in 2002: in July,
Nestlé merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bn
acquisition was announced of Chef America, Inc.

2003 +
The year 2003 started well with the acquisition of Mövenpick Ice Cream, enhancing Nestlé's
position as one of the world market leaders in this product category. In 2006, Jenny Craig
and Uncle Toby's were added to the Nestlé portfolio and 2007 saw Novartis Medical
Nutrition, Gerber and Henniez join the Company.

In April 2007, Nestle bought US baby-food manufacturer Gerber for $5.5 billion. 1 March
2010 , Bought Kraft’s Food (Frozen Pizza) for $3.7 billion. In February 2013, Nestlé Health
Science bought Pamlab . In February 2014, Nestlé sold its Power Bar sports nutrition
business to Post Holdings, Inc. In December 2014, Nestlé announced that it was opening 10
skin care research centers worldwide 2015
BUSINESS OVERVIEW
Nestlé is the world's leading nutrition, health and wellness company based in Switzerland. It
is the largest food company in the world measured by revenues. Nestlé's sells baby food,
breakfast cereals, coffee, confectionery, dairy products, frozen food, pet foods, yoghurt and
snacks. It owns several major consumer brands such as Stouffers, Nescafe, Kit-Kat,
Carnation, Nestlé Water, and many others.

Name Nestle S.A

Logo

Industries served Food Processing

Geographic area served Worldwide

Headquarters Vevey, Switzerland

Ulf Mark Schneider
Current CEO

Revenue 9,143 crores CHF(2018)

Profit CHF10.46 billion (2018)

Employees 308,000 (2018)

Mission:
"We strive to bring consumers foods that are safe, of high quality and provide optimal
nutrient to meet physiological need. Nestle helps provide selections for all individual taste
and lifestyle preferences."

Vision:
"Nestle's aim is to meet the various needs of the consumer everyday by marketing and
selling foods of a consistently high quality."
Nestlé has an aim to meet the various needs of the consumer every day by marketing and
selling food of a consistently high quality.

NESTLE : ITS PRODUCTS

Good Food is the primary source of Good Health throughout life. Nestlé strive to bring
consumers foods that are safe, of high quality and provide optimal nutrition to meet
physiological needs. In addition to Nutrition, Health and Wellness, Nestlé products bring
consumers the vital ingredients of taste and pleasure.

Beverages
With well over 3000 cups drunk every second, sales of Nescafé have been growing ever
since 1938 when Nestlé launched the first commercially successful soluble coffee. Nescafé,
which today includes ready-to-drink varieties, is so far the world’s most popular brand of
coffee. The Group markets traditional roasted coffees in several European countries, as well
as espresso coffee in capsules through Nespresso. Nestlé is also the worldwide leader in
chocolate/malt beverages, with brands such as Nesquik, Milo and Nescau.

Nestlé is present in fruit juices, where its most important brand is Libby’s in the United
States, and in tea-based drinks, particularly soluble and ready-to-drink Nestea. Nestlé is the
world leader in mineral and spring water through brands such as Vittel, Contrex, Perrier,
S.Pellegrino, Levissima, Vera, Panna, Fürst Bismarck and Naleczowianka in Europe and
Arrowhead, Poland Spring, Zephyrhills, Deer Park and Ozarka in the United States.

Milk products, nutrition and ice cream

Nestlé has long been a major player in the dairy business worldwide, originally with well-
known shelf stable brands such as Nido, Nespray, La Lechera and Carnation, then building a
strong international presence in chilled dairy and ice cream under the Nestlé brand.
Innovation and renovation play a major role in the development of milk based products as
well as of breakfast cereals, managed as a joint venture with General Mills. The area of
nutrition, with its benefits to health, well-being and fitness, is having a significant impact on
the development of our business.

Prepared dishes, cooking aids and pet care

A diversified range of soups, stocks, sauces and culinary preparations, primarily under the
Maggi brand, is adapted to local tastes, recipes and ingredients in each country. Maggi
instant noodles are sold in the Far East-Pacific area, as well as Europe, Africa and Latin
America. Nestlé’s frozen prepared dishes are marketed mainly under two brands, Stouffer’s
in the United States and Maggi in other regions of the world. Nestlé is present in Italian
cuisine with Buitoni pastas and sauces, both refrigerated and shelf stable. The Buitoni range
also includes a wide choice of frozen pizzas and recipe dishes.

In Europe, a full range of delicatessen products and cold meats is available under the Herta
brand.

The Group also manufactures cold sauces and condiments under various brands such as
Thomy, Crosse & Blackwell and Winiary. Our increasingly important pet care business,
under the Friskies brand, is a strong number two in the global market.

Chocolate, confectionery and biscuits

The global trend towards eating “on the go” provides opportunities for Nestlé to grow by
offering new and improved confectionery concepts that respond to consumers’ desire for a
wider range of taste experiences, available whenever and wherever they want them. The
range includes international brands such as Nestlé, Kit Kat, Smarties, Lion, Crunch, After
Eight and Polo as well as popular local brands such as Cailler, Butterfinger, Rossiya, Orion,
Caja Roja, Sao Luiz and Star.

Food Services
Nestlé first entered the food services market in the early eighties, targeting institutions and
restaurants. Over the next twenty years Nestlé rapidly increased its product offering and
built itself into the market leader. Its strategy was reoriented in 1999 to turn the emphasis
from being product driven to becoming more customer focused. Nestlé Food Services today
spearheads the Group’s drive into the fast growing area of out-of-home consumption,
enabling its customers to cater to the impulse market and consumers’ desire to eat
whenever, wherever and however they want. It combines its expertise in the out-of-home
market with Nestlé’s high quality brands such as Nescafé, Nestea, Nesquik, Maggi and
Buitoni to enhance the competitive advantage of its customers.

Nestlé has also developed specific Nestlé Food Services brands such as Davigel, Minor’s and
Chef to meet the requirements of such diverse customers as catering companies, fast-food
chains, hotels, restaurants and airlines. Nestlé Food Services’ success in creating products
and services that meet the requirements of its customers has enabled it to achieve a higher
than Group average level of growth at a higher than average level of profitability.

COMPETITORS

1. Mondelez

A top Nestle competitor, Mondelezis headquartered in Illinois and formed during the year
2012. It is a foremost snack company of Illinois. The company produces various products like
chocolate, beverages, cookies, and confectionary.

Their business operations are spread across the world and their source of revenue is from
outside the United States as well. Their operations are seen in approximately 1655 countries
and have revenue of about $30 billion which is generated across all their brands. Mondelez
main products categories are chocolate, biscuit, candy, grocery, and cheese. The company
keeps innovating new products that provide great taste and is liked by all.

The products are prepared in such a way that the taste suit to the particular place. The
company has great market dominance and it periodically modifies its products. The brand’s
fastest growing categories are gum, candy, cookies, and chocolate. Due to their great and
attractive categories, Mondelez is considered as one of the top Nestle competitors.

2. MARS
Also regarded as a top Nestle competitor, Mars is a famous food industry and is the topmost
producer of confectionary products. The company was formed during the year 1911 and is
located in the United States. The various confectionary products that this company
produces are Twix, Mars bars, M&M’s, Snickers, Skittles and Milky Way bars.

Apart from the confectionary products, the company produces some non-confectionary
products as well which includes Uncle Ben’s rice, pasta sauce etc. and pet foods includes
Whiskas, pedigree and Nutro brands. But the most liked product across the world is their
chocolate production

Their product line is Bounty, Snickers, Orbit, Bonty, and Chewing gum. Their customers are
huge and they focus on offering them healthy products. As they have a great product line
which is liked by customers, MARS is considered as one of the top Nestle competitors.

3. Kraft Foods
Kraft Foods is a popular food processing company that was formed during the year 2012. It
is an American company into manufacturing and processing conglomerate. It is
headquartered in Chicago and is a part of Kraft Heinz Company.

The company mainly focuses on grocery products for the markets in North America. Until it
got merged with Heinz, Kraft Foods Group is like an independent company that was listed
on the NASDAQ stock exchange. During the year 2015, Kraft got fully merged with Heinz.
The key reason for Kraft Foods success is due to its success in a merger with Heinz
and Cadbury’s. This company was one of the foremost to start content marketing and it is
taken care through the CRM activities.

The company manufactures multiple products which are seen in many categories like
sauces, chocolates, dairy products, desserts, and many more. Due to the wide distribution
of the company products, Kraft Foods is considered as one of the top Nestle competitors.

4. Danone
Yet another top Nestle competitor, Danone is a French food processing company that is
established in the year 1919 and headquartered in Barcelona, Spain. The company produces
various categories of products that cater to baby food, coffee, dairy products, breakfast
cereals, confectionery, bottled water, pet foods, ice cream, and dietary supplements.

Their products cater to people of all age group. Their production focuses on the production
and sale of healthy and delicious food that is custom-made for the requirements of people
of all ages. Their products cater to fresh dairy products, products related to medical
nutrition, products related to early life nutrition for people of all age group. Their products
guide customers for a healthy life. They also take of preserving the resources and protecting
the environment.

5. Hershey’s
A common food processing American company and also a top Nestle competitor, Hershey is
headquartered in Pennsylvania. This brand is quite popular and is liked by many. The
company is in the chocolate manufacturing industry ever since 1894

This brand is the largest manufacturer of chocolate and has its visibility across the United
States. The production units of Hershey’s are seen in eight units. The brand’s main focus is
on four main flavours like white, milk, gold, and dark. The company makes use of fresh milk
in their chocolate preparation that highlights the taste of the milk chocolate. The milk used
in low fat skimmed milk which is of high-quality. Even the cocoa that is used in their
chocolates is acquired from various cocoa growing regions.

Hershey’s has a huge product category like dark cocoa, snackers, soft crèmes candy, Licorice
candy, raspberry mints, dark chocolate peanut butter cups, and lots more. Their chocolates
come up with unique shape and taste. Due to their great products and its brand value,
Hershey’s is considered as one of the top Nestle competitors.

6. Unilever
Unilever is a British-Dutch company that is formed during the year 1930 and headquartered
in the United Kingdom and Netherland. It is a consumer goods producer company and their
products include food and beverage. It is also into the production of cleaning and personal
care products. It is the world’s largest consumer foods company.

Their products are available in about 190 countries and due to which it is popular in all
places. Due to its many years of existence, the brand is popular and is a brand imageof the
customers which is the main strength of this brand. The food products of this brand are of
high-quality and are prepared by including the best ingredient. Their production of food
products focus on the main areas of improving health, food safety, sustainable sourcing, and
reduce food waste.

The company is also updated with regards to products and has a huge fund in research. Due
to its extensive distribution channel, Unilever is a top Nestle competitor.

MARKETING STRATEGIES
Nestle is one of the oldest of all multinational business company. Its operate food basis
business around the world. In order to satisfy both developed markets and developing
markets. Nestle adopt the transnational strategy that contain the element of global
standardization strategy and localization strategy to operate its company by the 21st
century. By using the transnational strategy, Nestle enjoys the low cost through economies
of scale and offers different product to different markets with high local responsiveness in
order to defend its old markets in the developed markets and look for potential growth in
emerging markets.

 It uses a mix of value-based & product based positioning strategies depending upon
the kind of product they are branding & the market in which it is selling the
products.

 Nestle use the localization strategy to operation its business in the developing
world where Eastern Europe, Asia, and Latin America to optimize ingredients and
processing technology to local conditions and then using a brand name resonates
locally as the cultural habits difference in different nations.

 Customization rather than globalization is the key to Nestlé’s strategy in emerging.

For example, Nestle has taken as much as 85 % of the market for instant coffee in
Mexico, 66 % of the market for powdered milk in the Philippines, and 70 % of the
market for soups in Chile. Besides, Nestle hired local singer to promote its products
in Nigeria, the organization of a delivery system to increase efficiency in China, and
using local material and focusing on local demand such as make ice cream in Dubai.
 Nestle focus on increasing profitability by customizing the firm' products so that it
provides a good match to tastes and preference in different nation.
 Nestlé’s Competitive advantages:
1. Unmatched product and brand portfolio
2. Unmatched R&D capability
3. Unmatched geographic presence
4. People, culture, values and attitude
5. True competitive advantage comes from a combination of hard-to-copy advantages
throughout the value chain, built up over decades.
SWOT ANALYSIS
Nestle is one of the strongest companies in the world when it comes to the FMCG market.
Nestle coffee and Maggi both are almost a cash cow for Nestle .There are many brands in
Nestle which are super

STRENGTHS

1. World Renowned brand: Nestle is one of the fortune 500 Company and is world’s
largest food company measured by revenues. Nestle does individual branding of their
different food brands which help them in creating awareness about their various food
brands and its special features. The logic behind individual branding is very rational
.For eg. if a brand like Maggi is affected, it does not affect the sale of Coffee.
2. Extensive distribution system: With its diversified product portfolio, Nestle has been
successful in penetrating each and every household of the world. Locally adapted
distribution methods & decentralization in supply chain, including street markets,
mobile street vendors, door-to-door distributors & Medical outlets has helped the
company in making its products visible in the market.
3. Broad Product portfolio: Nestle has more than 8000 brands per products under its
name which ranges from beverages like Coffee & Mineral water, Breakfast cereals,
Soups & sauces etc. Under each product categories, Nestle have deep assortments to
satisfy different needs & wants of the consumers.
4. Large workforce: Nestle have engaged 340000 odd global workforces who are
continuously working to make its products available in every nook & corner of the
world.
5. R & D centres : Nestle have the world’s largest food & nutrition research organization,
with about 5000 people involved in R & D, as well as in corporate venture funds. It has
21 research centres globally.
6. Brand equity: According to Forbes’ list ,Nestle is at 34th highest rank brand in the world and
is awarded the among the World's Most Valuable Brands 2019 which says a lot about its
brand equity.
7. Nestle’s History: Nestlé has a long history over 140 years and over the tiem,
company’s name Nestlé” signifies the quality image high standard and quality
product.

WEAKNESSES

1. Legal & consumer issues: Although Nestle is global food giant but it got itself into lot
of controversies over the years like Nestle baby formula boycott. Child labor by
suppliers, Chocolate price fixing etc. which resulted in negative word of mouth
2. Maggi Controversy – In India, Maggi was recently banned because it was found to
contain some additives which were harmful. This affected the brand name of Nestle
as well as Maggi big time. However, it was relaunched later on and Nestle is trying to
convince people about the quality of Maggi.
3. Brand structure: It has many brands under the same umbrella group so managing
such large and wide number of individual brands can create conflict of interest.
 4. Matured Market: Entering into markets that are already mature and can have a tough
competition with new entrants.
5. Duplicity : Increasing instances of product recalls hampering brand equity.

OPPORTUNITIES

1. Strategic Alliances: Nestle is already engaged in partnerships with a number of major

companies, such as Coca-Cola, and several others, opening doors of opportunities for
the company. It is one of the main shareholders of L’Oreal, the world’s
largest cosmetics So partnering with other food giants will help the company in
future growth.
2. Healthy breakfast – Maggi, oats or other such healthy breakfast alternatives have a
big time future as most breakfast alternatives are very heavy and people are
becoming more health conscious. Nestle has more scope in market penetration with
regards to its Cereals.
3. Expanding market: By entering into other markets & penetrating more & more in the
rural markets through its robust supply chain and transition of unorganized business
to organized one will lead to further expansion of the company’s business.
4. Increasing Income levels: Due to stable political scenario, improved literacy rate &
controlled inflation, disposable income of the people is increasing there by resulting
into upsurge in demand & changing their lifestyle.
5. Focusing more on R & D to handle ethical issues: Recent outcry of Maggi Noodles in
India for lead presence like issue will create hindrances in the future growth of the
company. So in order to handle these health issues, Nestle must invest in R & D
further to come up with more hygienic food products.

THREATS

1. Competition in the market: With increasing number of local & national players, it is
becoming very hard for the companies to differentiate themselves from others. There
is also threat from counterfeit products destroying its brand image in the market.
2. Price of commodities: Increasing price of commodities will result in increase in the
price. Further increase in price will result in decrease in sales, margins & eventually
leads to brand switching.
3. Buyers power: With highly diversified consumer goods market where there are lots of
brands claiming different sorts of benefits, it’s very difficult for consumers to stick to a
particular brand & hence results into brand switching where consumer got power or
options to select a brand based on several factors like availability , reference group
,personal recommendation, preference & price.
4. Competitors’ strategies: Company like Cadbury is giving more discounts to retailers
as compared to distributors due to which retailers prefer its products for sale.

RECOMMENDATION
Nestle has a very established setup of both its operations and marketing. What the
company should invest in is building its public image as a corporately responsible company
as well. As it has already been discussed out above Nestle is one of the world’s most
boycotted companies because of a certain perception that it commits corporate crimes
when coming to environmental practices. The company needs to make sure that the
particular image is altered. Also, the products of Nestle which are not doing so well in
certain markets should be pulled out rather than constantly spending more on them to turn
their value around. Some products are difficult to sail because of the culture of the market
which Nestle operates in and therefore should be avoided to ensure sunk costs do not
occur.

CONCLUSION
In conclusion it is safe to say that Nestle has a lot of positive attributes backing its larger
than life product portfolio and therefore the company has managed to sustain its position in
the list of the fortune 500 companies. The company through the use of efficient
management procedures, innovation, capital infusion and research and development
continues to expand its portfolio and also serves as an example of not just a an exceptional
food and nutrition providing company but also a real multinational corporation. There are
many lawsuits against the company and it is also generally considered to be one of the
world’s most boycotted companies and despite all off that the revenues of the company
have hardly slumped since its inception. That is a testament to their value chain creation
and streamlined processes that ensure that Nestle becomes a part of the everyone‘s
livelihood all around the world.

BIBLIOGRAPHY
• http://www.academia.edu/

• http://www.marketing91.com/

• www.slideshare.net/

• http://www.nestle.com/

• http://www.strategicmanagementinsight.com/

• www.gotabout.info/