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Company Chosen: Nestlé
Background Information of Nestlé
Early Years
In 1866, the Anglo-Swiss Condensed Milk Company was founded and set up in Cham, Switzerland, by two American brothers, George Page and Charles Page. In 1867, the company opened its first condensed milk factory in Cham. And began producing and selling their Milkmaid Brand, and it is still sold today as Nestlé Milkmaid.
By 1891, the company owned 12 factories across the United States and Europe which exported worldwide. However, Charles Page died in 1873, leaving George to run the whole company by himself.
In 1867, a breakthrough for infant food was discovered by German born Henri Nestlé (Picture below). He developed ‘Farine Lactée’, which means flour with milk, for infants who couldn’t be breastfed and began selling it in Vevey Switzerland. He retired in 1875, selling the Nestlé company and factory to 3 local businessmen.
It is around 1867 to 1868 where he began to use his now iconic symbol as his trademark. And he was one of the first Swiss manufacturers to build his brand using a logo. And the logo served another purpose, to protect his products from imitators.
The design of the logo was based on the Nestlé family’s coat of arms which featured a bird sitting in a nest. The design was to make a link between his family and his company.
In 1878, the Anglo-Swiss Condensed Milk Company and Nestlé developed a fierce rivalry as the 2 companies began developing and selling different versions of the core product, infant food and condensed milk, of the other company.
And in 1905, the Anglo-Swiss Condensed Milk Company and Nestlé merged into one and became the Nestlé and Anglo-Swiss Condensed Milk Company and began to develop into the company that we know of today.
Modern Times
The headquarters of Nestlé is located in Vevey, Vaud, Switzerland. Mr Paul Bulcke is the current Chairman and former CEO of Nestlé. And the current CEO of Nestlé is Mr Ulf Mark Schneider, who was the CEO of Fresenius, a healthcare company based in Germany.
Nestlé has over 2,000 brands worldwide, such as Maggi, KitKat and Milo among others. And Nestlé sells those products in almost 190 countries. They have over 400 factories in 85 different countries and employs over 300,000 people.
As of May 2017, Nestlé’s market capitalisation is US$ 230 billion. Market capitalisation is the value of a company that is traded in the stock market. They made an estimated US$ 90 billion in sales, made an estimated profit between the ranges of US$ 7 to US$ 9 billion and their assets were worth an estimated US$ 130 billion in 2017.
Industries Nestlé Operates In
Fast Moving Consumer Goods Industry
Fast moving consumer goods are low costing commodities that have a high turnover rate. Fast moving consumer goods have a very short shelf life due to either the high market demand for such goods or the product worsens over time.
Such commodities are sold at high volumes with low margins. However, sales of such items may depend on whether it is the holidays and/or the different seasons.
Fast moving consumer goods include food and beverages, home and personal care and cigarettes.
Food and Beverage Industry
The food and beverage industry is divided into 2 segments, the production of food and beverages and the distribution of these edible products. Production includes the processing of packaged food, sweet drinks and other modified food. And distribution refers to transporting the finished good to the customer.
Products under food consist of confectionaries, cereals, ice creams and many others. And Products under beverages include soft drinks and tea.
Pet-Care Industry
The pet-care industry involves all the products and services that keep pets alive, happy and healthy. These products and services includes pet food, toys, pet training, cages and medical services among many others.
Products and Services of Nestlé
Nestlé has over 2,000 brands of products and services, including global icons such as KitKat, Milo and Nescafe. Below are a few examples of the products and services that they provide to the world.
Baby Foods
Cerelac
The Cerelac brand was first introduce in 1949, and now it is sold in Belgium, India, Philippines, South Africa and Portugal today. It is food for infants who are over 6 months, and when breastmilk can no longer provide nutrition that an infant needs.
An other brands of baby food include Gerber, Nestum and Graduates.
Cereals
Chocapic
Chocapic, also known as Koko Krunch in South East Asia, is a whole grain cereal that is infused with a chocolatey taste. And is available not only in South East Asia, but also in Latin America and Europe.
An Interesting fact to know that any Nestlé Cereal that has a green banner at the top is made with whole grain.
Other brands include Cookie Crisp and Estrelitas, also known as Honey Stars.
Chocolates & Confectionaries
Smarties
Since 1937, Smarties has been a popular chocolate brand for the people of Germany, Australia, South Africa, Canada and the United Kingdom.
Wonka
Wonka has been in operation since 1983, and the Wonka brand includes candies such as Nerds, Laffy Taffy and Wonk Chocolate.
Other chocolate and confectionary Brands under Nestlé include KitKat, Crunch, Butterfingers and Orion.
Pet-care
Purina
For more than 75 years, Purina has been developing their pet food recipes in order to reassure pet owners that their pets are getting the proper nutrition and diet they need in order to live long happy lives.
Dog food brands include, Purina has Alpo, Chef Micheal’s Canine Creation, Beneful, Dog Chow and Bakers Complete. And cat food brands include, Purina has Cat Chow, Felix, Supercoat, Gourmet, Fancy Feast and Friskies.
Other Products and Services
As mentioned earlier, Nestlé has over 2,000 brands of products and services. The brands mentioned above barely scratched the surface.
Other Nestlé brands includes a Coffee brand known as Nescafé.Beverage brands such as Milo, Nestea and Nesquick. Diary Brands such as Carnation and Nido. Ice cream brands such as Häagen-Dazs and Mövenpick among many many others.
Nestlé Key Types of Customers/Clients
Brand Category
Nestlé’s key types of customers and clients are those that have a fondness for Nestlé’s powdered and liquid beverages. Followed by lovers of Nestlé’s healthcare nutrition brands. Then in third are those who adore Nestlé’s milk and ice cream products.
Geographically
According to Nestlé’s 2017 annual report, the United States ranked number 1 for sales in terms of geographic location in terms of Swiss Francs (CHF). The total number of sales in the United States was 26.678 billion CHF. China, came in second with 6.578 billion CHF and in third was France with 4.426 billion CHF in sales.
So based on geographic location, Nestlé’s key types of customers and clients are from the United States, China and France. With most of the Sales coming from the United States, United States customers and clients holds precedence over the other countries.
Nestlé Key Target Market
Due to having over 2000 brands, Nestlé will understandably have several target markets for their different products. So I will only touch upon a few products that I have mentioned earlier.
Purina Supercoat
The target market for Purina Supercoat consists of pet owners (Demographic), who are located in Asia, Africa and Oceania (Geographic), and are looking for pet food that offers a balanced nutrition for their pets (Behavioural).
Cerelac
The target market for Cerelac consist of mothers with infants who are 6 months old and older (Demographic), who are part of the middle class and above (Psychographic), and are looking for a baby food brand that will provide their child with nutrients essential for their growth and health (Behavioural).
SWOT of Nestlé
Strength
Nestlé has one of the largest research and development (R&D) networks of any food company in the world. Nestlé has 3 Science & Research centers and 31 Product Technology centers with more then 5,000 employees worldwide.
Weakness
With over 2000 brands, Nestlé will have difficulty coordinating every single one of them efficiently. And with that many individual brands, decisions made by the Nestlé hierarchy may create conflicts of interest.
Opportunities
Since 2002, the average annual growth rate of the pet-care industry is 5.4% according to the American Pets Product Association (APPA). Nestlé can take advantage of that begin to improve their current pet-care products and/or develop something new to attract more customers.
Threats
Being in many different industries, Nestlé has to face competition on all fronts. And there is increasing competition from foreign and local companies, and it is very difficult for brands to differentiate themselves from each other. Not only that, there are counterfeits that may damage the reputation of a brand.
Competitors of Nestlé
Mars, Incorporated
Background Information of Mars, Incorporated
Mars, Incorporated was founded in 1911 by Frank C. Mars. And with his son, Forrest Mars Sr, began to build the company to what it is today.
First they created the Milky Way bar, then expanding their business overseas and later on the company began to explore into new markets by diversifying the business.
Today, Mars, Incorporated operates in over 80 countries and employs between 80,000 to 100,000 people. Mr Grant F. Reid is their current CEO and president, and their headquarters is located in McLean, Virginia, United States.
Mars, Incorporated deals in pet-care, confectionary, food and drinks. Brands of Mars, Incorporated includes M&Ms, Twix, Snickers, Mars and Skittles.
Nestlé Sponsorship Involvements
Past Involvements
IAAF Kids’ Athletics Programme
Nestlé was the main sponsor of the International Association of Athletics Federation (IAAF) Kids’ Athletics Programme. It was a 5 year sponsorship deal which started in January 2012. During those 5 years, Nestlé provided financial assistance in order to develop the IAAF Kids’ Athletics programme which had an audience of over 1.5 million kids in 100 territories by 2011.
With the additional funds, the IAAF Kids’ Athletics programme was able to reach more kids in existing markets and in new markets as well. However, Nestlé terminated the agreement they had with the IAAF in 2016 due to allegations of corruption and doping made against the IAAF.
Current Involvements
FC Barcelona
In 2016, Nestlé Milo became an official club sponsor, and will remain an official club sponsor for the next 4 years. This is the first time Nestlé has ever made an agreement with a sports club.
The agreement includes the Nestlé Nesquik brand in the Middle East, Africa and Europe. It also includes publicity, image, merchandising, marketing, association, digital, hospitality rights, promotion and different activities with FCB Escola.
Objectives for Involvement
Increase Awareness
A possible reason for Nestlé to get involve in Sponsorship is to increase awareness of their brands. Nestlé has many brands, from the iconic Nestlé Milo and KitKat brand to less well known brands such as Toll House, Cini Minis, Stouffer’s and Peptamen. So, sponsorship is an opportunity for Nestlé to promote their less well known brands.
Using sponsorship, Nestlé will also be able to increase the awareness of their products in new markets. And with sponsorship, Nestlé will be able to bypass any legal prohibition by local authorities on television advertisements.
Image Enhancement
With Sponsorships, Nestlé will be able to reinforce the image of an existing product and build pride among employees and distributors for the product. An example being the agreement that Nestlé has with FC Barcelona.
As mentioned earlier, this is the first time Nestlé has ever made an agreement with a sports club. And by being an official club sponsor, Nestlé will be able to reinforce the already good image the Nestlé Milo has as fans of FC Barcelona are very passionate about their club. So, when they see that Nestlé Milo is supporting their club, they form a very good impression of them.
And there is a chance that some of the employees working for Nestlé are fans of FC Barcelona. So seeing the company that they work for support the club that they love, it might motivate them to work harder or make them feel a sense of satisfaction when they work.
Recommended Sponsorship
The event that I recommend Nestlé to sponsor is Pet Fair Asia.
Background Information on Pet Fair Asia
Pet Fair Asia started in 1997 in Hong Kong, but was moved to Shanghai a year later, and it is now one of the largest exhibition event for pet supplies targeted at the Asian market. In 2017, an estimated 100,000 consumers went for the event, and the number of consumers in 2017 went up by an estimated 24% as compared to 2016. And there was around 33275 professional visitors in 2017, which is also a 24% increase from 2016.
In 2018, Pet Fair Asia will be co-located with Aquarama, who are the international exhibition for aquariums and terrarium supplies, ornamental fish and reptiles, garden and pond products. And both events will put on show a total of 1300 exhibitors in 10 separate halls. They will be expecting over 110,000 consumers and 50,000 professionals in this years event.
Justification of Sponsorship
Increase in pet-care industry
As mentioned earlier, the pet-care industry has been experiencing a steady growth in recent years. And with pet-care raking in 12.5 billion Swiss Francs (CHF) for Nestlé in 2017, the potential for sales to increase is very plausible.
By sponsoring Pet Fair Asia, Nestlé will be able to take advantage of the growing pet-care industry, and increase sales, brand awareness and use the event as a way to do product trials or try and sell their existing products
Promoting its own pet-care products
Nestlé’s Purina Supercoat will be able to hit it’s target market, which is pet owners who are located in Asia, Africa and Oceania who are looking for a pet-care brand that is able to provide their pets with a balanced nutrition, if it were to be exhibited during the event.
As it is a pet fair, with visitors from Asia, Africa and Oceania and other parts of the world attending the fair and Purina Supercoat will be able to provide pets with a balanced nutrition, as evidenced here.
References
(n.d.). Retrieved May 12, 2018, from https://www.nestle.com/aboutus/history/nestle-company-history/page-brothers-anglo-swiss
TSU Blog 14 