Nestle Current Scenario Essay
Nestle Current Scenario
Nestle India has an excellent understanding of the local market and has launched products that meet the tastes and needs of the local population. The majority of its products currently cater to urban Indians and the company is progressively expanding its reach into rural areas as the country’s per capita income grows. According to Nestle India ‘At Nestle India we make big investment in people, they are our top priority. For us, our people are the key drivers for our success. Nestle India provides its employees a dynamic professional environment bound by one spirit, ‘The Nestle Spirit’ and that makes Nestle India a great place to work.
Nestle India is a vibrant company enhancing the quality of life of its customers by offering them world class food products driven by Nutrition, Health and wellness. Ay Nestle India your integrity, professional skills and performance is what matters. They trust their people and believe in giving early responsibilities and encourage them to actively contribute to the long term sustainable growth of the business.
At Nestle India, they believe in building leaders who can take on challenges, innovate and write success stories. Nurturing starts from day one on the job. Business dynamics and need directed training programs offer employees with opportunities to acquire and develop desired functional, people management and decision making skills enabling success at work. In India Nestle has presence in the following segments: Milk Products and Nutrition NI’s largest segment is Milk and Milk Products. The Milk Products and Nutrition segment is further broken down into Infant Foods and Other Dairy Products.
Nestle has 80% market share in the babycereal segment – a segment that has a very promising future. Nestle’s Milkmaid is still the market leader with a 55 per cent market share. Nestle Curd launched as late as 2001 has quickly captured 25 per cent of the market with a range of variants. Its dairy whitener “Everyday” has a 25 per cent market share as well. Beverages Nestle is the Indian market leader in instant coffee, with 55% market share, and its Nescafe brand dominates the premium segment. Nestle is the value leader in the instant coffee with Nescafe.
Year 2009 was challenging for coffee business due to adverse climatic and weather conditions that were experienced in India. NescafeCappuccino had a successful start and popularly priced pack supported the growth. Nescafe Sunrise Rich Mountain Blend received very good feedback and despite the challenging environment Nescafe performed satisfactorily, achieved volume and market share growth in India. . Chocolates and Confectionary India has a young population which is supportive of ongoing growth in the confectionery business.
Nestle believes sweet snacking is an intrinsic part of people’s lives. In 2009 it undertaken innovation and renovation to continue to delight the consumers and has grown the market for ‘lighter eating’, now leader in the wafer choco-layer segment of the ‘Chocolate and Confectionary’ business. NI’s Munch bar is the largest selling brand in its category. India is the largest consumer of sugar in the world; however most of this consumption is currently in the form of traditional sweets. Nestle has 17% share in confectionery and chocolate market with brands like Milkybar, KitKat, BarOne.
It has became the leaders in the Eclairs category with Nestle Eclairs, and in the Mint segment Nestle Polo continued to grow its market share. Prepared Dishes and Cooking Aids Ready to cook food and cooking aids are sold under the umbrella brand name Maggi. Maggi is the brand pioneer of ‘Taste Bhi Health Bhi’. Recently it has completed its 25 years and launched ‘Me and Meri Maggi’ campaign and builds an emotional relationship with the customers. Instead of brand taking to consumers, it allowed the consumers to talk about their unique experiences with the Maggi and made consumer a hero of communication.
NI has about 80% market share in the instant noodle segment. This segment will be an important growth driver going forward. Through its well-diversified food product portfolio, Nestle has been able to achieve an impressive growth in both topline and bottom-line. Nestle brands, ranging from Nescafe, Milo, Maggi to Kit Kat and Polo, enjoy a high brand equity in each of their respective categories. Recently, the company expanded its product range to mineral water under the brand Pure Life, dahi (curd), butter and ultra heat treated (UHT) milk.
The company aims to achieve growth through these products by leveraging on its strong brand equity. It will, however, have to face tremendous competition from existing players in the market (except in the category of UHT milk). The growth rate of these products is estimated to be around four to six per cent. Market Competition HUL (Knorr Soupy noodles), ITC (Sunfeast Pasta), and GSK (Foodles) —who entered the market nearly simultaneously are a major competitors in the prepared dishes segment. The difference between these competitors and any Nestle has seen earlier is that they are deep-pocketed.
ITC, for instance, is known to have no qualms about losing money in the first few years in any new category that it enters as long as it captures market share (think biscuits at the expense of Britannia). GSK Consumer and HUL are competitors that will be in for the long haul. Nestle’s iconic brand Nescafe too is facing tough competition from HUL’s Bru. Both have an equal market share of around 40 per cent each. Beverages (this category includes Nescafe and Nestea) bring in 14. 5 per cent of the company’s revenues. The Chocolates and Confectionary market is leaded by Cadbury at 79% and followed by Nestle at 14% and Amul 5%.
However, Nestle still has a few products that do not face serious competition. These include baby foods products and its Milkmaid brand. Nestle owns 30% of the world’s largest cosmetics and beauty company L’Oreal and its brands including Garnier, Maybelline, and Lancome as well as The Body Shop stores. Maggi continues to be a key volume driver for Nestle with 21. 7% volume growth 60% of the incremental volumes for the company. Milk products and nutrition volumes grew 13. 1%. Chocolates and Confectionary volumes grew 9. 5% as a rammage cut in chocolates and frequent pack size changes impacted growth.
It is estimated that 16. 7% CAGR in volumes over CY 09-11 with all segments contributing to growth. Nestle India reported a good increase in its standalone net profit for the second quarter. During the quarter, the profit of the company rose 26. 54% to Rs 1,210. 90 million from Rs 956. 90 million in the same quarter, last year. The company posted earnings of Rs 12. 56 a share during the quarter, registering 26. 61% growth over prior year period. Net sales for the quarter rose 23. 5% to Rs 10,356. 30 million, while total income for the quarter rose 23. 78% to Rs 10,423. 40 million, when compared with the prior year period.
Nestle is planning to invest Rs 6 billion in India in 2009 for expansion of its business in the country. The company which has allotted an investment of Rs 3 billion in the Indian market in 2008, would be doubling the investment in 2009 as part of its business strategy. Nestle International is reinvesting and expanding in India and Nestle India will have all the financial resources to expand and grow from the parent company.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 3 January 2017
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