nestle india confectionery market
DESCRIPTION
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 industryTRANSCRIPT
Nestle India: Challenges Faced in the Indian Confectionary Market
Submitted By- Millan Sahoo (43)Namrata singhal (47)Subhodeep Biswas (86)Prasun Chandra (57)Vijay Kumar Mishra(98)
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.
Nestle India- a brief profile
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.
Vision
"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.
Mission
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.
The Challenges Facing Nestle India- in the confectionary market
Relative profit Share Across Product Portfolio
Product Portfolio
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
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
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
Swot Analysis
Bargaining Power of Customers
Competitive Rivalry within the Industry
Porter’s 5 Forces Model
Bargaining Power of Suppliers
Threat of Substitute Goods
Threat of New Entrants
BCG MatrixStar Products
Maggie NoodlesProcessed food & Beverages
Question Mark• C
hocolate & Confectionary
Cash Cow• M
ilk Products & Nutrition
Dog• N
estle Dahi
BCG Matrix
Relative Market Share
Market Growth
rate
The confectionery industry in India is approximately divided into:• Chocolates• Hard-boiled candies• Éclairs & toffees• Chewing gums• Lollipops• Bubble gum• Mints and lozenges
Confectionery Industry Analysis India
World confectionary market
Common factorGovt policiesTaxes Labour skill & wages Power & water supplyTechnology & Infrastructure
Uncommon factors ResourcesTransportation
Operation Factors
Nestlé's Facility Locations
.
Manufacturing Plant State Location
Moga (Punjab) 1961
Choladi (Tamil Nadu) 1967
Nanjangud (Karnataka), 1989
Samalkha (Haryana) 1993
Ponda and Bicholim (Goa) 1995 & 1997
Pantnagar (Uttarakhand) 2006
Tahliwal (Himachal Pradesh)
2012 choladi
Nanjangud
Goa
MogaPantnagar
Samalkha
Tahliwal
Gurgaon
Cadbury’s Facility Locations
• .Manufacturing Plant State Location
Thane 1948
Induri, Pune
Malanpur, Gwalior 1989
Baddi, HP
Bangalore 1950
Hyderabad 2006
Cocoa OperationsDharapuram
1970
Facility Locations
• . Tahliwal
Kolkata
Pant nagarHariyana
Panjab
Goa
KarnatakaTN
Most Important ingredients Milk Sugar others
Largest Sugar producing states
1. AP
2. Bihar
3. Gujarat
Department of Food & Public Distribution report
NDDB
• Largest Milk Producing states
1. UP
2. Rajasthan
3. AP
4. Gujarat
5. Punjab
Resource Factor
M A N U F A C T U R E R
Carriage & Forward agent
Distributer /Wholesaler
Retailer
End customer
Distribution channel
Procurement( vendor selection )
Modernizing Ware house (RF)
Distribution (customer)
Transportation
Process & Design
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)
SCM
Complexity
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.
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.
Financial Analysis
2008 2009 2010 2011 20120
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Net Sales & PAT (Rs in crores)
Net SalesPAT
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.
Financial Analysis
• 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).
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.
Important points
• 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.
Culture at Nestlé and Human Resources Policy
• 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.
Nestlé Apprentice Program
• 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.
Local Training
Nestlé Healthy Kids Program• In collaboration with Universities Nestlé Healthy Kids for
Delhi Health Camp: Micronutrient awareness • In collaboration with Drishtee Foundation
Shared value ( Nutrition)
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
Shared value ( Rural development)
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
Shared value ( Water)
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.
Suggestions
Thank You