Despite performing well & being a market leader in almost all segments viz. beverages, food, milk, noodles and culinary products in India, the company is yet to display the same growth success in confectionery segment. The report provides inclusive and in-depth analysis of the scopes and challenges for Nestle India and is going to analyze the major industry drivers, along with the challenges hindering the growth of the company in this booming industry

1. Nestle India: Challenges Faced in the
Indian Confectionary Market
Submitted ByMillan Sahoo (43)
Namrata singhal (47)
Subhodeep Biswas (86)
Prasun Chandra (57)
Vijay Kumar Mishra(98)

2. Nestle India- a brief profile
 subsidiary of Nestlé S.A. of Switzerland. vibrant Company that provides products of
global standards and is committed to long-term sustainable growth
 employ around 2, 80,000 people and have factories or operations in almost every
country in the world.
 The Company is acknowledged amongst India's 'Most Respected Companies' and
amongst the 'Top Wealth Creators of India‘.
 The culture of innovation and renovation within the Company and access to the
Nestlé Group's proprietary technology/Brands expertise and the extensive
centralized Research and Development facilities.

3. Vision
 Food is a source of nourishment and satisfaction, but also pleasure,
health, happiness and peace of mind.
 Nestle – strive to make their products tastier and healthier.
 Largest R&D network of any food company in the world, with 34
R&D facilities (3 Science & Research centers and 31 Product
Technology Centres and R&D centers worldwide), and over 5,000
people involved in R&D.
 Are able and committed to create trustworthy products, systems and
services that contribute to improving the quality of consumers’ lives.

4. Mission
"Good Food, Good Life"
Best tasting, most nutritious choices in a wide
range of food and beverage categories and eating
occasions, from morning to night.

5. The Challenges Facing Nestle India- in the confectionary market
 Falling much behind Cadbury in the race - market
share continues to decrease.
 Opportunities & challenges in a bulging market
with changing trends
Recent splurge in investment in India- ambitious
plan of a long term growth.

6. Relative profit Share Across Product Portfolio


7. Product Portfolio

8. Swot Analysis
Strength (S)
• Strong Brand Recognition
• Experience of operating in Indian Market
• Capital & R&D support from the Parent company
• Competitive Pricing
• High quality of Manufacturing

9. Swot Analysis
 Weakness ( W)
• Less products in the premium segment
• Profit margin low
• Supply chain
 Opportunity (O)
• Expansion
• High Growth Confectionary Market
• Recent Investments in R&D
• Global Strategy stressing profit from Nestle India

10. Swot Analysis
Threat
• High Market Share of the Immediate Competitor
• Ever Increasing competition in the confectionary
Industry
• Sectoral woes
• Trend towards healthy eating
• Growth of private labels

11. Porter’s 5 Forces Model
Bargaining Power of Suppliers
Threat of New
Entrants
Bargaining Power
of Customers
Competitive Rivalry within the Industry
Threat of Substitute
Goods

12. BCG Matrix
Star Products
Question Mark
• Maggie Noodles
• Processed food & Beverages
• Chocolate & Confectionary
Market
Growth
rate
BCG Matrix
Cash Cow
Dog
• Milk Products & Nutrition
• Nestle Dahi
Relative Market Share

13. Confectionery Industry Analysis India
The confectionery industry in India is approximately divided
into:
• Chocolates
• Hard-boiled candies
• Éclairs & toffees
• Chewing gums
• Lollipops
• Bubble gum
• Mints and lozenges

14. World confectionary market

15. Operation Factors
 Common factor
 Govt policies
 Taxes
 Labour skill & wages
 Power & water supply
 Technology & Infrastructure
 Uncommon factors
 Resources
 Transportation

16. Nestlé's Facility Locations
Manufacturing Plant
State Location
.
Tahliwal
Moga (Punjab)
Choladi (Tamil Nadu)
1961
Moga
1967
Samalkha
Pantnagar
Gurgaon
Nanjangud (Karnataka),
1989
Samalkha (Haryana)
1993
Ponda and Bicholim (Goa)
1995 & 1997
Goa
Pantnagar (Uttarakhand)
2006
Tahliwal
(Himachal Pradesh)
2012
Nanjangud
choladi

17. Cadbury’s Facility Locations
Manufacturing Plant
• .
Thane
State Location
1948
Induri, Pune
Malanpur, Gwalior
1989
Baddi, HP
Bangalore
1950
Hyderabad
2006
Cocoa Operations
Dharapuram
1970

18. Facility Locations
• .
Tahliwal
Panjab
Pant nagar
Hariyana
Kolkata
Goa
Karnataka
TN

19. Resource Factor
Most Important ingredients
 Milk
 Sugar
 others
 Largest
states
1. AP
2. Bihar
3. Gujarat
•
Sugar
producing
 Department of Food & Public
Distribution report
1.
2.
3.
4.
5.
NDDB
Largest Milk Producing
states
UP
Rajasthan
AP
Gujarat
Punjab

20. Distribution channel
MAN UFACTU R ER
 Carriage & Forward agent
 Distributer /Wholesaler
 Retailer
 End customer

21. Process & Design
 Procurement( vendor selection )
 Modernizing Ware house (RF)
 Distribution (customer)
 Transportation

22. SCM
 M A N U F A C T U R E R ( 8 in the country)
 C & F agent (1 Each state)
 Super stockiest ( 1 Each state)
 Distributer (depend on size of city), 1300 till 2010
 Retailers ( 5.5 Lakhs)
 End customer
 Wholesaler ( unstructured)

23. Complexity

25. Financial Analysis
Profitability Ratio
• EBIT is good as it is increasing constantly which is good sign for
company. However in EBITD is low due to high depreciation. Gross
profit margin is constant in these years as it should not fluctuate. Net
profit margin is constant as profit is also increasing proportionally to
sales.
• The reason behind decrease in ROCE is mainly because company has
invested huge capital in last three years and it will take few years to
recover the amount.

26. Financial Analysis
Efficiency Ratio
• ITR: It shows how many times a company's inventory is sold and replaced
over a period. It implies poor sales and, therefore excess inventory.
• DTR: It is used to quantify a firm's effectiveness in extending credit as well
as collecting debts. A high ratio implies either that a company operates on a
cash basis or that its extension of credit and collection of accounts receivable
is efficient.
• FATR: It has declined significantly as amount is locked up in fixed asset Rs
3000 crores in upgrading and expanding existing capacities as well as setting
up new plants.

27. Net Sales & PAT (Rs in crores)
10000
9000
8000
7000
6000
5000
Net Sales
4000
PAT
3000
2000
1000
0
2008
2009
2010
2011
2012

28. Financial Analysis
Liquidity Ratio
• Liquidity Ratios are quite manageable and under control and it has
shown the trend of constant decrease in these ratios which is good
sign for the company. But one alarming fact is that gap between
Current and Quick Ratio as good amount of investment is blocked in
Inventory.

29. Important points
• During past 3 years Nestle India has invested around Rs 3000
crores in upgrading and expanding existing capacities as well as
setting up new plants to prepare of new reality.
• It added another 5,00,000 outlets accelerating from 4,00,000
incremental outlets in the previous year.
• During the year, export grew by 7.6% which was around 12%
last year.
• The company completed its expansion plan in Tahilwal
(HP), Samalkha (Haryana), Ponda (Goa) and in Moga (punjab).

30. Important points
• Finance cost has increased significantly from Rs 51 million to
Rs 266 million as Nestle India has borrow money from Nestle
SA parent company through (External Commercial Borrowing)
ECB route.
• We will accelerate penetration and increase frequency and
develop winning concepts.
• We will focus on both growth and margins.
• Nestle runs 30 research and development centers, with 5,000
employees, globally and its research budget was 1.4 billion
Swiss francs in 2011.

31. Culture at Nestlé and Human Resources Policy
• Learning is an integral part of Nestlé’s culture.
• People development is the driving force of the policy.
• The policy deals with recruitment, remuneration and training and
development and emphasizes individual responsibility, strong
leadership and a commitment to life-long learning.
• Training is done on-the-job.
• Formal training programs are generally purpose-oriented and
designed to improve relevant skills and competencies.

32. Nestlé Apprentice Program
• Apprenticeship programs have been an essential part of
Nestlé training where the young trainees spent three days a
week at work and two at school.
• It’s not only a matter of learning bakery; trainees also learn
about microbiology, finance, budgeting, costs, sales, how to
treat the customer, and so on.
• Additional courses are held outside the factory when
required, generally in connection with the operation of new
technology.

33. Local Training
• Training farmers on cattle raising, feeding & breeding practices
and on health of daily herds.
• course is designed specifically to cover farm management, milk
production, cattle health, nutrition and breeding.
• Deployed trained veterinarians & other experts to local farmers
in order to transfer knowledge, equipment & technology
required to enhance calf-survival rate & set up of a farm
infrastructure.
• Village Women Development Programme – 30000 trained
women dairy farmers.

34. Shared value ( Nutrition)
 Nestlé Healthy Kids Program
• In collaboration with Universities Nestlé Healthy Kids for
Delhi
 Health Camp: Micronutrient awareness
• In collaboration with Drishtee Foundation

35. Shared value ( Rural development)
 Milk Farmers, technical assistance and training to farmers
 Village Women Dairy Development Program Chicory
farmers
 Training, Improve chicory quality and productivity The
NESCAFÉ Plan
 Launched on 5th Jan 2012 Sanitation facilities
 Sanitation projects benefitting girl students

36. Shared value ( Water)
 Clean Drinking Water Projects
 Access to clean drinking water in village schools across
factories Water Awareness Program
 Creating awareness among village school students
International Water management Institute
 Water Awareness Program for milk farmers

37. Suggestions
 Marketing
•
•
Develop Exclusive packaging ( Brand Recall)
Focus should be more on Premium chocolate
•
Re-positioning of Alpino.
 Operation
• Establish Facility in UP or near by, that improve presence in central India as
well as they can buy resources at more cast effective manner
• Fix or Remove whole sellers ( Define responsibility & Area)
 Financial
• Loan Restructure
 HR
• They believe it pays off in the long run in their business results.
• It is important to give people the opportunities for life-long learning.

38. Thank You