a study on nestle - brand building distribution and imc strategies
TRANSCRIPT
16 April 2010 United International University
A Study on Nestle Brand Building, Distribution and IMC Strategies
Submitted by
Meer Ahsan Habib ID No : 113081017
United International University
Submitted to
Mr Mushtaque Ahmed Visiting Faculty of Brand Management
United International University
Table of Contents
1. Executive Summery 2 2. Historical Background 3
3. Nestlé’s Business Principal 4
4. Core Value of Nestlé ‐ Creation of Shared Value 5
5. Major Acquisitions and Sales 7
6. Products 8
6.1 Cereals 8
6.2 Coffee 8
6.3 Water 8
6.4 Other drinks 8
6.5 Chilled 9
6.6 Ice cream 9
6.7 Infant foods 9
6.8 Performance nutrition 9
6.9 Healthcare nutrition 9
6.10 Seasonings 10
6.11 Frozen foods 10
6.12 Chocolate, confectionery and baked goods 10
7. SWOT Analysis 11
7.1 Strengths 11
7.2 Weakness 11
7.3 Opportunity 12
7.4 Threats 12
8. Building the Brand Nestle 14
8.1 Evolution of Nestle Logo 14
8.2 The First Mover 15
8.3 Acquisition 15
8.4 Relying on Existing Distribution Channel 16
9. Marketing tactics ‐ the marketing mix 17
9.1 Product strategy 17
9.2 Pricing strategy 18
9.3 Promotional strategy 18
9.4 Distribution strategy 19
10. Distribution Structure Of Nestle India 20
10.1 Selection of distributors 20
10.1.1 Capital investment 20
10.1.2 Relevant experiences 20
10.1.3 Infrastructure 21
11. Performance 22
11.1 Group sales, profitability and financial position 22
11.2 Sales and EBIT margin by operating segment 22
11.3 Future Plan 23
12. Conclusion 24
13. References 25
16 April 2010 United International University
A Study on Nestle Brand Building, Distribution and IMC Strategies
Submitted by
Meer Ahsan Habib ID No : 113081017
United International University
Submitted to
Mr Mushtaque Ahmed Visiting Faculty of Brand Management
United International University
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1. Executive Summery
The paper examines historical background of Nestlé, its target market, about
the value it is creating. Then it makes a focus on its marketing Mix strategies
i.e. product, price, place and promotion. A distribution network has also been
drawn to give an idea of the distribution network which ensures that
consumers get Nestlé’s products at ease. IMC options that are crucial for
letting the consumers know that the product is readily available to be
consumed by them. In this regard a few print and commercial ads have been
analysed.
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2. Historical Background
Nestlé is the world's leading Nutrition, Health and Wellness Company. The Company is committed to
increasing the nutritional value of its products while improving the taste. Since Henri Nestlé
developed the first milk food for infants in 1867, and saved the life of a neighbor’s child, the Nestlé
Company has aimed to build a business as the world's leading nutrition, health and wellness
company based on sound human values and principles. In August of that year, Charles A. and George
Page, brothers from Lee County, IL in the United States, established the Anglo‐Swiss Condensed Milk
Company in Cham. In September, in Vevey, Henri Nestlé developed a milk‐based baby food and soon
began marketing it. In the succeeding decades both enterprises aggressively expanded their
businesses throughout Europe and the United States. (Henri Nestlé retired in 1875, but the
company, under new ownership, retained his name as Farine Lactée Henri Nestlé.) In 1877 Anglo‐
Swiss added milk‐based baby foods to its products, and in the following year the Nestlé company
added condensed milk, so that the firms became direct and fierce rivals.
In 1905, however, the companies merged to become the Nestlé and Anglo‐Swiss Condensed Milk
Company, retaining that name until 1947, when the name Nestlé Alimentana SA was taken as a
result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company,
Alimentana SA of Kempttal, Switzerland. Maggi was a major manufacturer of soup mixes and related
foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company was
operating factories in the United States, United Kingdom, 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 more than doubled.
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
activity.
Nestlé felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to
US$6 million in 1939. Factories were established in developing countries, particularly Latin America.
Ironically, the war helped with the introduction of the company's newest product, Nescafé, which
was a staple drink of the US military. Nestlé's production and sales rose in the wartime economy.
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3. Nestlé’s Business Principal
Nestlé is committed to the following Business Principles in all countries, taking into account local
legislation, cultural and religious practices:
• Nestlé's business objective is to manufacture and market the Company's products in such a
way as to create value that can be sustained over the long term for shareholders,
employees, consumers, and business partners.
• Nestlé does not favor short‐term profit at the expense of successful long‐term business
development.
• Nestlé recognizes that its consumers have a sincere and legitimate interest in the behavior,
beliefs and actions of the Company behind brands in which they place their trust, and that
without its consumers the Company would not exist.
• Nestlé believes that, as a general rule, legislation is the most effective safeguard of
responsible conduct, although in certain areas, additional guidance to staff in the form of
voluntary business principles is beneficial in order to ensure that the highest standards are
met throughout the organization.
• Nestlé is conscious of the fact that the success of a corporation is a reflection of the
professionalism, conduct and the responsible attitude of its management and employees.
Therefore recruitment of the right people and ongoing training and development are crucial.
• Nestlé continues to maintain its commitment to follow and respect all applicable local laws
in each of its markets.
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4. Core Value of Nestlé ‐ Creating Shared Value
As a basis for responsible operations and business success over the long term, Nestlé believes it
must manage its operations in a manner to comply with the highest standards of business practice
and environmental sustainability.
This involves compliance with national laws and relevant conventions, as well as Nestlé’s own
regulations, which often go beyond our legal obligations. These are laid out in our Nestlé Corporate
Business Principles and related policy documents, and their application is verified through Nestlé’s
CARE programme and Nestlé’s internal Corporate Group Auditors.
Beyond that, how we do business is based on sustainability ‐ ensuring that Nestlé’s activities
preserve the environment for future generations. In line with the Brundtland Commission's
definition, sustainable development to Nestlé means "development that meets the needs of the
present without compromising the ability of future generations to meet their own needs".
However, we believe that to build a profitable business for Nestlé’s shareholders, we must go
beyond compliance and sustainability to a third level: creating long‐term value for both society and
for Nestlé’s shareholders. This is what Nestle means by Creating Shared Value:
• using Nestlé’s core business strategies and operations to create value for shareholders;
• serving consumers and the public by offering them nutritious products that are both
enjoyable and contribute to their health and well‐being;
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• seeking to improve the economic and social conditions for people and communities across
Nestlé’s entire value chain – for farmers who supply Nestlé raw ingredients, for communities
where Nestlé’s factories are located, for suppliers who work with Nestlé and for Nestlé’s
trade partners.
The primary way we create value is by offering consumers tasty, nutritious products that contribute
to their health and well‐being, but we also create value for people and society across the entire
business value chain – for farmers who supply Nestlé raw ingredients, for communities where
Nestlé’s factories are located, for suppliers who work with Nestlé, and for Nestlé’s trade partners.
The diagram below illustrates how Nestlé’s actions, driven by Creating Shared Value, create value for
the business (in economic, innovation, social and environmental terms) that is shared with the
societies where Nestle is present. It was developed as a conceptual framework to measure a
company’s overall net impact on its stakeholder groups by the Centre for International Business at
Leeds University Business School
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5. Major Acquisitions and Sales
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 Petfoods (1998), and Ralston Purina (2002).
There were two major acquisitions in North America, both in 2002: in June, Nestlé merged its U.S.
ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef
America, the creator of Hot Pockets. In the same time frame, Nestlé came close to purchasing the
iconic American company Hershey's, though the deal fell through. Another recent purchase includes
the Jenny Craig weight loss program for US$600 million. In December 2005 Nestlé bought the Greek
company Delta Ice Cream for €240 million. In January 2006 it took full ownership of Dreyer's, thus
becoming the world's biggest ice cream maker with a 17.5% market share. In November 2006, Nestlé
purchased the Medical Nutrition division of Novartis Pharmaceutical for $2.5B, also acquiring in 2007
the milk flavoring product known as Ovaltine. In April 2007 Nestlé bought baby food manufacturer
Gerber for $5.5 billion. In December 2007 Nestlé entered in a strategic partnership with a Belgian
chocolate maker Pierre Marcolini. Nestlé agreed to sell its controlling stake in Alcon to Novartis on 4
January 2010. The sale forms part of a broader US $39.3 billion offer by Novartis to fully acquire the
world’s largest eye‐care company
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6. Products
Nestlé has a wide range of branded products across a number of markets including coffee (Nescafé),
bottled water, other beverages, chocolate, ice cream, infant foods, performance and healthcare
nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food.
6.1 Cereals
• Cinnamon Grahams
• Cookie Crisp
• Koko Krunch
• Milo Cereals
• Nestlé Corn Flakes
6.2 Coffee
• Buondi (Portugal)
• Christina (Portugal)
• Dolca (Argentina)
• Ecco (Peru, Chile)
• Nescafé
• Nespresso
6.3 Water
• Aberfoyle
• Deer Park
• Ice Mountain
• Henniez
• Perrier
6.4 Other drinks
• Milo
• Chocolate D'Onofrio (Peru)
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• Cocoa D'Onofrio (Peru)
• Nescao (Argentina, Peru)
• Nescau (Brazil)
6.5 Chilled
• Chamyto (Brazil, Mexico, Chile, Philippines)
• Chiquitín (Mexico, Chile)
• Club (Mexico)
• Hirz (Switzerland)
• La Laitière (France,Belgium)
6.6 Ice cream
• Mövenpick
• Mivvi
• Nestlé
• Nestlé Drumstick ‐ The Original Sundae Cone
• Nestlé Princessa
6.7 Infant foods
• Cérélac
• Farinha Láctea (Brazil)
• FM 85
• Gerber
• Nestlé
6.8 Performance nutrition
• Musashi
• Neston
• Nesvita
• PowerBar
• Pria
6.9 Healthcare nutrition
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• Boost
• Carnation Instant Breakfast
• Nutren
• Peptamen
• Glytrol
6.10 Seasonings
• Buitoni
• Maggi
• Carpathia
• CHEF
• Thomy
• Winiary
6.11 Frozen foods
• Maggi (INDIA)
• Stouffer’s
• Lean Cuisine
• Buitoni
• Hot Pockets
• Lean Pockets
6.12 Chocolate, confectionery and baked goods
• Kit Kat
• Matchmakers
• Nestlé Alpine White
• Nestlé with Almonds
• Polo
• Toffee Crisp
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7. SWOT Analysis
7.1 Strengths
• Global food producer, located in over 100 countries. Consistently one of the world's largest
producers of food products, with sales in the USA in 2008 of $10 billion; sales and earnings in
2008 were better than expected, even in a downturned economy. Global sales in 2008
topped $101 billion.
• Repeatedly ranked as the world's largest bottled water company and have set up facilities to
operate water resources in a responsible manner. In 2008, Nestlé was named one of
"America's Most Admired Food Companies" in Fortune magazine for the twelfth consecutive
year.
• Nestlé provides quality brands and products and line extensions that are well‐known, top‐
selling brands including:
• Professional brands sold to restaurants, colleges, hotels, and food professionals including
Jenny Craig meals, Impact liquid meals for trauma patients, liquid meals for diabetics, and
OptiFast weight loss products.
• Successful due in part to their unquestionable ability to keep major brands consistently in
the forefront of consumer's minds (and in their shopping carts) by renovating existing
product lines, keeping major brands from slipping into saturation/decline and having
superior access to distribution channels.
7.2 Weakness
• Their LC‐1 division was not as successful as they thought it would be in France. In the late
1980s, Dannon entered the market with a health‐based yogurt, and become the top selling
brand of yogurt; Nestlé's 1994 launch was behind the product life cycle curve in an already
mature market and could not compete against a strong, established brand.
• Growth in their organic food sales division was flat in 2008, even though the industry grew
8.9%.
• Since 2004 the breakfast cereal industry has been under fire from the FDA and the American
Medical Association, both of which say that false claims of "heart healthy" and "lower
cholesterol" need to be removed from packaging and advertising. They have also been
forced to reduce the amount of sugar in their products, as parent's advocates groups
claimed they were contributing to the diabetes epidemic among American children.
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• General Mills is an experienced, established brand and are the market leader in the USA,
however, they have been lacking in innovation, have not cashed in on the booming health
food craze and have been behind in creating new, niche products, especially in their yogurt
division, where Yoplait is the only brand making a profit.
• In 2008, although their products did not carry the recalled pistachios, several of their ice
cream brands, Dryer's, Edy's and Haagen‐Dazs, were still plagued with bad PR and loss of
sales.
7.3 Opportunity
• In today's health conscious societies, they can introduce more health‐based products, and
because they are a market leader, they would likely be more successful.
• Provide allergen free food items, such as gluten free and peanut free.
• They launched a new premium line of higher cacao content chocolates dubbed Nestlé
Treasures Gold, in order to cash in on the "recession economy" in which consumers cut back
on luxury goods, but regularly indulge in candy and chocolate. Americans want luxury
chocolates, and high‐end chocolate is immune to the recession (so far), because it is an
inexpensive indulgence.
• Opened Nestlé Café's in major cities to feature Nestlé products.
7.4 Threats
• Any contamination of the food supply, especially e‐coli. Their Toll House brand cookie dough
was recalled in March of 2009 because of e‐coli. Outbreaks were linked to 28 states and the
product had to be recalled globally. Nestlé has yet to find out how this happened, and is still
investigating.
• They were affected by the pet food recall in 2007, in which 95 different brands of dog and
cat food were recalled due to contamination with rat poison. Also in 2007, FDA learned that
certain pet foods were sickening and killing cats and dogs. FDA found contaminants in
vegetable proteins imported into the United States from China and used as ingredients in
pet food.
• Raw chocolate ingredient prices are soaring; dairy costs alone rose 50% in 2008, this cuts
heavily into their profit margins and often gets passed on to consumers, by shrinking the
packaging in a way that is almost unnoticeable‐therefore the consumer is paying the same
prices for less product.
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• They have major competitors, like Hershey's, Cadbury‐Schweppes (owned by Pepsi), Lindt
and Ghirardelli, Kellogg's, Post, Starbucks, Beech‐Nut, Quaker, Kraft Foods, Dannon, Del‐
Monte, Iams, Earth's Best, Heinz, Frito‐Lay (owned by Pepsi).
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8. Building the Brand Nestle
Nestle is a house of Brands which provides about 8500 brand names, but only 750 of them are
registered in more than one country and only 80 are registered in more than ten countries. This is
due to the fact that Nestle’s strategy is based on a broad range of local brand names which are not
entitled as “Nestle”.
Company: Nestle SA
Parent Brand Name: Nestlé
Slogan : Good Food, Good Life
Brand Mark and Logo
8.1 Evolution of Nestle Logo
The Nestlé logo was launched by Henri Nestlé in 1868 on the basis of the meaning
of his name in German, i.e. little nest, and of his family emblem
Henri obtained a 15-year French patent for his logo in 1868.
After he retired, it was registered in Vevey in 1875 by the new owners of his company
In 1938, the traditional nest design was combined with the "Nestlé" name
to form what is called the combined mark
In 1966 the design was simplified.
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In 1988, the worm in the mother bird's beak was removed and the fledglings
became two instead of three. It is said that it was meant to better illustrate
the activities of the company, no longer active only in nutrition, and to reflect
the average modern family of two children.
The logo we know now has just been simplified. The tree is supposed to
represent an oak and the birds thrushes.
8.2 The First Mover
Nestle follows the first mover advantage strategy which means that the company enters in an early
stage the emerging markets, in order to establish a network there before competitors such as
Unilever do so. The first step they make is to establish a substantial position by selling basic products
such as infant formula and condensed milk to the customer with the goal to build up commending
positions in each niche.
8.3 Acquisition
In order to save the costly process of establishing a brand name, Nestle simply purchases local brand
names which the consumer is accustomed to. This helps the company to overcome cultural barriers
and customer resentments to foreign brands. After these niches of basic food supply are filled Nestle
moves on into the more upscale segments such as chocolate, soft drinks and the like. Their strategy
is to establish a basis and then expand into more niches as demand rises. Connected to the rising
demand is the rising income level as the population can afford to spend more money on food
products. The company uses that approach in order to the convenient fact that the consumer is
easier to be reached because he is accustomed to this brand name and they think they know what
they are buying. Acquisition contributes about 2/3 to Nestle’s growth rate, hence this emphasizes
the importance of this functional part of the company.
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8.4 Relying on Existing Distribution Channel
Consequently, marketing is easier and less costly because a reputation, a distribution channel and
customer loyalty already exists for that product with that brand name. As a result Nestle can focus
its distinctive competencies on product improvement and technological aspects such as process
innovation.
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9. Marketing tactics ‐ the marketing mix
9.1 Product strategy
No matter how effective the promotion and packaging, a firm will find it very difficult to market a
product which fails to satisfy a consumer need. Let us discuss kit Kat here. Kit Kat owes much of its
success to a unique dual appeal ‐ as a four‐finger chocolate bar, (known in the confectionery trade as
a countline), sold at corner shops and newsagents, but also as a two‐finger biscuit sold in
supermarkets. It is a product that has endured because of its wide appeal across the age ranges and
to both sexes.
Altering the actual product is potentially a very hazardous act for an established brand name as it
risks altering the consumer perceptions of quality built up over decades. Tampering with the
recognised core qualities could well damage the integrity of the brand. For Kit Kat, these intrinsic
elements of the brand, or unique selling points include the:
• chocolate fingers
• foil and band wrapping, unique in the countlines market and seen as an important feature
which encourages involvement and sharing by consumers
• well‐known strapline ‐ Have a Break, Have a Kit Kat.
In spite of the risks of altering the product, the two finger bar and multipacks were introduced in the
1960s to meet the increased needs of supermarket shopping and more recently, Orange, Mint and
Dark Chocolate Kit Kats have been available for limited periods. In the third week that Kit Kat Mint
was available, it more than doubled total Kit Kat Sales. The Orange Kit Kat proved particularly
popular with sales of 38 million bars in just three weeks. It provided very positive market research
results. While they are seen as novelties, they can also be used to provide reassurance and
reinforcement of the core attributes of the original established brand name.
Special editions are used primarily as promotional tools. Market research has shown that consumers
prefer special editions to be available for limited periods only and that consumers are likely to
purchase the original Kit Kat at the same time or shortly after. (They are, therefore, a good way of
injecting new life into the Kit Kat product life cycle). Depending on their popularity, some special
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editions are introduced more than once. The Orange Kit Kat has proved so popular that the two‐
finger multipacks are now permanently available.
Apart from these variants, the intrinsic characteristics of the Kit Kat product and packaging have
changed very little during the last sixty years. Although some minor, subtle changes have been made
in packaging, merchandising and sales promotions, a Kit Kat from the 1930s would be instantly
recognisable to modern consumers today.
9.2 Pricing strategy
A key advantage of maintaining a strong brand image in a competitive market is a degree of
flexibility in the pricing strategy. It is a common characteristic of imperfectly competitive markets for
producers to concentrate on non‐price competition. When looking at the pricing strategy for Kit Kat,
it can be seen from the figures that the real price has remained remarkably stable over the last sixty
years.
9.3 Promotional strategy
Nestle has used both ATL and BTL options in its IMC activities. And the company has laid great
emphasis on marketing, particularly on IMC activities. Marketing and administrative expenses rose
by 110 basis points to 33.7% of sales. Nestlé increased their media spend by 10% in constant
currencies, thereby taking further advantage of lower media rates in many markets. Investment in
R&D was up 10 basis points, expanding Nestlé’s R&D capabilities – especially in developing countries
– and further fuelling Nestlé’s innovation pipeline. These actions demonstrate our commitment to
delivering in the short term whilst continuing to invest for the long term.
Nestlé has used a wide range of promotional tactics with Kit Kat. Promotion offers have included
free bars in the multi‐bar family packs and an instant win deal with Burger King in 1996. This
promotion, where over 75 million free burgers were on offer, increased sales of Kit Kat by an
estimated 30% In 1998, an on‐pack promotion featuring 'The Simpsons,' with the chance to win
£20,000 cash and hundreds of other prizes, increased sales of Kit Kat by a staggering 41%
Advertising plays an extremely important part in the confectionery industry, with spend approaching
£114 million in 1996. The Have a Break, Have a Kit Kat theme appeared briefly in 1939, but has been
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the on‐going Kit Kat slogan, or strapline, since the mid 1950s. Kit Kat's advertising is concentrated in
two media:
• television commercials ‐ which follow the well‐known Have a Break tradition
• posters ‐ where the powerful colours of the pack and product are used to dramatise the
message.
A particular challenge for the advertisers is to appeal to both the consumers and the purchasers.
Women account for two thirds of all confectionery sales, but a large proportion of these purchases
are subsequently consumed by children. Men eat as much as they purchase suggesting they are less
generous!
9.4 Distribution strategy
Nestlé has developed distribution channels which ensure the availability of Kit Kat to buy wherever
and whenever the consumer wishes to purchase it. Sales of confectionery depend heavily on its
availability, with market research showing that well over 60of all purchases are made on impulse.
Consequently, Nestlé tries to supply as many outlets as possible ‐ both wholesaler and retailer
channels.
Point of sale merchandising is also important when consumers are making instant, snap decisions
from a wide range of products on view. Instantly recognisable packaging also helps to tempt
customers. Shoe shops, for example, have recently been identified as having potential for
confectionery sales owing to the large number of families that visit them. It is also predicted that
confectionery, along with all foodstuffs, will become available through cable and interactive
television, videophones and the Internet.
Internationally, Kit Kat is now also manufactured in Canada, Germany, India, Malaysia, China, Japan,
Australia, South Africa and the United States. It is available in more than 100 countries throughout
the World.
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10. Distribution Structure Of Nestle
Nestlé follows more or less same distribution channel all over the world
10.1 Selection of distributors
Criteria are:
10.1.1 Capital investment‐
This is dependent not only on the present required turnovers but also on the estimated future
capital investments that will be required by the distributor (based on company’s growth plans in the
area). Amounts required vary from area to area and markets to markets.
10.1.2 Relevant experiences
It is imperative that the distributor has had some prior experience as a channel member in the
FMCG sector so that no training is required to be imparted to him on aspects of the business. The
Mother Godown at Ghaziabad, Delhi –UP
B d
Respective C&F Agents
Distributors as per assigned territories
Retailers in their respective territories
End Consumer
Wholesalers in their area.
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distributor should not be dealing in competitor’s products and should be able to function as a
dedicated channel for Nestle. For example, while deciding on a distributor for chocolates, an obvious
preference would be an existing distributor for other products of Nestle
10.1.3 Infrastructure
Appropriate infrastructure (depending on the market served and overall volumes )
Should be there‐
a) Godowns / storage space. For chocolates, air conditioned godown space (with wooden padding
will be required).
b) Delivery vehicles
c) Salesmen
However there are no written guidelines that are fixed for the above criteria and the company
exercises its discretion based on markets to be served.
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11. Performance
11.1 Group sales, profitability and financial position
In 2009, the Nestlé Group’s sales reached CHF 107.6 billion, with organic growth of 4.1%, including
real internal growth of 1.9%. Foreign exchange impacted sales by ‐5.5% and divestitures, net of
acquisitions, by ‐0.7%. Food and Beverages’ sales reached CHF 99.8 billion, with organic growth of
3.9%, including real internal growth of 1.6%. Foreign exchange impacted Food and Beverages’ sales
by ‐5.7% and divestitures, net of acquisitions, by ‐0.7%.
Nestlé’s EBIT margin was up 30 basis points reported, and up 40 basis points in constant currencies,
to 14.6%, with an EBIT of CHF 15.7 billion. The EBIT margin for Food and Beverages was also up 30
basis points reported, and up 40 basis points in constant currencies.
Underlying earnings per share rose by 9.6% from CHF 2.82 to CHF 3.09, or 16.3% in constant
currencies. Net profit was CHF 10.4 billion in 2009 and earnings per share were CHF 2.92. These
figures are not directly comparable with 2008 because of the CHF 9.2 billion profit on the disposal of
24.8% of Alcon in 2008.
The Group's operating cash flow rose by 67% or CHF 7.2 billion to CHF 17.9 billion, while free cash
flow increased to CHF 12.4 billion. This improvement reflects a particularly strong working capital
performance. Nestlé’s net debt reached CHF 18.1 billion. The group’s return on invested capital
(ROIC) including goodwill increased by 90 basis points to 15.6% and by 30 basis points to 35.1%
excluding goodwill. In line with changes in segment reporting, the ROIC calculation has been
restated on a comparable basis
11.2 Sales and EBIT margin by operating segment
In 2009, the organic growth of Nestlé Food and Beverages amounted to 4.8% in the
Americas, 1.2% in Europe and 7.4% in Asia, Oceania and Africa. The results were broad‐
based across all categories and regions, combining strong top and bottom line performance,
thereby demonstrating the disciplined alignment of our people behind clear strategic
priorities fuelled by higher levels of brand support and R&D investment.
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Jan.‐Dec. 2009
Sales
in CHF
millions
Jan.‐Dec. 2009
Organic
Growth
(%)
EBIT Margins
Jan.‐Dec.
2009
Change vs.
Jan.‐Dec
2008
Food & Beverages
‐ Zone Americas 32 168 + 6.5 16.8% +20 bps
‐ Zone Europe 22 528 + 0.3 12.4% 0 bps
‐ Zone Asia, Oceania and
Africa 15 891 + 6.7 16.7% +20 bps
Nestlé Waters 9 061 ‐ 1.4 7.0% +100 bps
Nestlé Nutrition 9 963 + 2.8 17.4% +10 bps
Other Food & Beverages 10 187 + 6.8 15.7% +80 bps
Nestlé Food and Beverages 99 798 + 3.9 13.1% +30 bps
Pharma (incl. Alcon) 7 820 + 6.7 33.5% ‐60 bps
Total Group 107 618 + 4.1 14.6% +30 bps
Nestlé Waters, Nestlé Nutrition and Other Food & Beverages are not included in the Zones.
Nestlé Professional activities have also been taken out of the Zones and included in Other
Food & Beverages.
11.3 Future Plan
To reach additional 1 billion new consumers in next ten years.
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12. Conclusion
Nestlé’s is continuously investing in it’s Brands. Nestlé’s success can be attributed to consistency in
its marketing, whilst allowing for minor changes to maintain a modern image. Above all, the brand
has enjoyed continuous backing with investment in marketing to both the trade and consumer
sectors, enabling it to compete successfully with both established and new products. Continuous
reinforcement of the brand message through advertising and promotions has enabled Nestlé’s to
sustain its popularity over a long period of time in the face of rapidly changing consumer attitudes
and tastes and consumption patterns.
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13. References
http://www.marketingteacher.com/SWOT/nestle_swot.html
http://www.marketingteacher.com/SWOT/nestle_swot.html
http://www.nestle.com/
http://www.purina.com/
http://www1.nespresso.com/precom/index.php?checkCookie=1
http://www.nestle‐nutrition.com/Public/Default.aspx
www.youtube.com