WHY NESTLE? Several reasons European Truly international Food industry Huge product range Interview with Bart VANDEWAETERE - Responsible for European affairs Works not only in finished products but also close to the farm and farmers worldwide. Has an enormous multinational workforce and a great reputation.
Nestlés Timeline1866 SwitzerlandFounder Henri Nestlé German Pharmacist 1867 Launch of Farine lactée (cow’s milk, wheat flour and sugar)Nutrition has been Nestle’s cornerstone eversince
Nestlés Timeline 1868 First Logo representing nutrition WWI created new demand for dairy products By the end of the war Nestlé had 40 factories worldwide 1938 Nescafé coffee was launched 1940 launch of Nestea 1943 WWII helped popularise Nescafé (American servicemen)
Nestlés Timeline1945 WWII ends & marks the beginning of a dynamic phaseof Nestlé’s historyNew products, growth accelerates.1948 “Quik”, the instant chocolate milk was invented. Weknow it as Nesquik1986 Nespresso - enable anyone to create the perfect cup ofespresso.1988 Italian brand Buitoni-part of Nestlé’s Portfolio
2001 Nestlé Purina PetCare Company2006 - Concept of Shared Value Nestlé can only besuccessful over the long term if it creates value forshareholders & society.2011 Partnership Chinese food company Yinlu and Hsu Fu Chia confectionery and snacks manufacturer
Competetive advantagesUnmatched product and brand portfolioUnmatched research and development capabilityUnmatched geographic presencePeople cultures, values and attitudes
Growth driversNutriton, Health and WellnessEmerging markets and Popularity Positioned Products(PPP)PremiumisationOut-of-home consumption
Operational pillarsInnovation and renovationOperational efficiencyWhenever, wherever, howeverConsumer Communication
Key Numbers• Total revenue over 83 billion CHF• Organic growth 7.5 %
Nestle SwitzerlandVevey, Headquarter of Nestle17 locations9699 employees of 80 nationalitiesRevenue 2.1 billion CHF
OrganisationNestle is organised in a matrix system, by products andgeographyProducts – in terms of the business units They define the strategy of each of the products EG: Ice cream, coffee, nutrition (infants), etc.Geographies – The businesses have their central head unit Zone Europe, Zone Americas, Zone Asia/Oceania/Africa
OrganisationThe matrix structure serves Nestlé wellFor a global organisation, the ability to organise aroundgeographical markets and also around products is anadvantageIt has a manager in charge of a product line, but eachproduct line is also coordinated with a manager in charge ofa specific geographical area
OrganisationNestle is very decentralised, and has a polycentric approachto the way they do business The regions decide which products should be put on the market, and how they communicate with the consumersOf course, there are some exceptions, such as: Nestlé Nutrition – needs of babies are the same everywhere in the world Nestlé Purina Petcare Nestlé Waters Nespresso Nestlé Professional Nestlé Health Science These are known as GMB – Globally Managed Businesses
Pest AnalysisPolitical Nestle is in full support of the Governments efforts to encourage healthier diets and active lifestyles to help counter problems associated with obesity, diabetes and cardiovascular diseases We have made significant change to improve our products profile to complement the Governments efforts to create a healthier population
Pest AnalysisEconomic Organic growth of 7,5 % in 2011
Pest AnalysisSocial Nestle was founded on social responsibility, sound human values and principles more than 140 years ago Though it is a global brand, Nescafe is locally produced to meet the taste preferences of local consumers
Pest AnalysisTechnology Innovate & renovate nutritious and healthier products using R&D expertise Every Nestle product undergoes as extensive R&D process and a stringent quality standard before it is launched benefit from world-class manufacturing facilities, best private R&D capability in food and nutrition, international quality and safety standards
Layers of the Environment - Industry -Food & Drink Industry Complex, global collective of diverse businesses Processed food sales worldwide are approximately US$3.2 trillion (2004) Over 16.5 million people are employed in the food industry (4.1 million people in the EU) More people in the world are involved in agriculture as their primary economic activity than in any other It only accounts for twenty percent of the worlds Gross Domestic Product (GDP) Regarding technology, it is hard to find an area that does not have a direct impact on the food industry – agricultural machinery; biotechnology; nanotechnology; etc. computing such as networks and special software etc. For example, the GLOBE tool: has been able to track the advantages that decentralisation brings in terms of benefits
Layers of the Environment - Industry -Pet Food Industry Four companies—Procter & Gamble, Nestlé, Mars, and Colgate- Palmolive—are thought to control 80% of the worlds pet-food market, which in 2007 amounted to US$ 45.12 billion for cats and dogs alone Leading Exporters: 2004 were France ($993 million), United States ($786 million) and the Netherlands ($511 million) Leading Importers: Japan ($718 million), Germany ($617 million) and the UK ($563 million)
CompetitionNestle‘s competitors may be categorised in two maintypes: Packaged food companies Store brands form retailers
Store brands from retailersSafewayWal-Mart storesWalgreen Company
Porter’s 5 ForcesCreated to act as structure for industry analysis and businessstrategy development.
Threat of New EntrantsFood Industry large & competitiveCompanies enter this market every year in attempt togain a portion of profitable marketNestlé has been around for over a centuryIts long history, product quality, consumersatisfaction allowed Nestlé to obtain a considerableshare of the marketNew entrants should capture a portion of Nestlé’sMarket to survive
Threat of Substitute GoodsNestlé is surrounded by the threat of substitutegoodsWide range of similar products that compete directlywith NestléCompetition is fierceNestlé’s responsibility to improve its productsNestlé focused on health and wellness in order for itsproducts to stay competitive.
Bargaining Power of SuppliersCreates and maintains positive relationship with itssuppliersNestlé holds large purchasing powerNestlé holds more bargaining power than its suppliersThe company prefers Long-term relationship with itssuppliers which ensures quality of productsOffers advice to suppliers on how to perform moreeffectively and minimize cost
Bargaining Power of Customers Customers have large amount of power in regards to Nestlé’s products consumption Nestlé’s understands the power of customers and has taken specific steps to meet their needs Society is more health conscious Nestlé is incorporating health and wellness in its products.
Competitive Rivalry within the Industry Nestlé is a powerhouse in the Food Industry They are in constant and continuous battle to outperform one another These companies spend hundreds of millions to appear more desirable. Companies continue to strive in order to stay competitive but consumer will continue to enjoy ever- improving products.
Why would we invest?CSR (corporate social responsibility) CSV (creating shared values)StabilityGrowth (6% - 7%)R&D in Nutritional FoodsWater Stockholm Industry Water Award
SourcesVandewaetere, Bart. Responsible for EuropeanAffairs, Nestlé. Personal Interview. 28th November 2012Nestlé’s Website, November 2012, www.Nestle.comWikipedia, http://en.wikipedia.org/wiki/Food_industryHickman, Leo. Britains problem with pets, TheGuardian, November 13, 2009.Bond, Jessica Taylor. Top 10 global petfoodleaders, PetfoodIndustry.com, accessed November 13, 2009. "Pet Food Exports: Country by commodity". FAO. 2004.Retrieved 2008-02-24