nestle global strategy case study

How Nestlé Became The World's Largest Food Company

Table of contents.

Let’s trace the origins of Nestlé and its exceptional legacy of 150+ years that have led it to become a company with:

• Market cap of $326.07 Billion as of Feb 9, 2023
• Over 2000 brands worldwide
• Monumental presence in 186 countries
• A workforce of nearly 276,000 employees
• Revenue of CHF 87.1 billion in 2021
• 354 factories in 79 countries

Grab a Kit Kat or sit back with a cup of freshly brewed Nescafe, and let’s go back to 1866 , the year it all began.

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A Merger Lays The Foundation Of Nestlé’s Success

The story of Nestlé begins with Henri Nestlé of Vevey, a namesake of the company, and unsurprisingly, its founder. But it is also linked with two brothers, Charles and George Page, who were located far away in America at the time.

While the world of business was not a global village back then, perhaps it was fate, the love for milk, or sheer successful marketing strategy that brought the businesses of the two together to form the Nestlé we see today.

The creation of Anglo-Swiss Condensed Milk Company

Charles Page was a U.S. consul who visited Switzerland and became intrigued by its Swiss cows and beautiful meadows. The country had been a primary milk production center since the 19th century due to its available resources of high-quality cows and attracted people with a passion for milk production from far and wide. 

Page was one such individual with a different aspiration: he wanted to create condensed milk. Easy to store and transport, condensed milk, according to him, was the next big thing in the entrepreneurial world. 

Therefore, with his brother George Page, he created the Anglo-Swiss Condensed Milk Company and opened the doors of the first-ever condensed milk factory in Switzerland, in the town of Cham, in 1866.

Henri experiments

Meanwhile, Henri Nestlé was a local pharmacist in Vevey who loved experimenting with anything and everything he could get his hands on. This meant creating incredible food fusions was right up his alley.

During the 1860s, infant mortality rates remained a grave problem in Switzerland. As a man with 13 siblings, Henri understood the woes of infants. Yet, the turning point came when he saw that premature babies faced difficulty in consuming breast milk.

Invoking his creativity, he combined available resources and his scientific knowledge to produce “ Farine Lactee ” in 1867, an infant formula made with cow’s milk, wheat flour, and sugar.

This proved to be a breakthrough, and soon, sales increased to 1000+ cans in 1871 and more than 2000 in 1873. Two years later, Nestlé’s products could be found worldwide, including but not limited to Indonesia, Egypt, and the U.S.

As sales increased exponentially, Henri gave his company a logo symbolizing his family name that meant “Little Nest”. The logo, therefore, contained a bird’s nest.

Today, the logo has been simplified but remains its original idea and charm as an ode to the founder.

A rivalry emerges

In 1875, Henri retired, and the company was led forth by three local businessmen in Vevey. However, simultaneously, the Anglo-Swiss Condensed Milk Company expanded to newer markets in Europe, and upon discovering Nestlé’s infant formula and its success, it developed a rival product and floated it into the market.

To Nestlé, this was nothing less than a declaration of industry war, and soon after, Nestlé added a new product to its portfolio: a Farine Lactee condensed milk. Fierce competition developed, followed by price wars and predatory market strategies.

As both companies competed for a greater market share and ROI on their rival products, it did not come as a surprise when both began generating lower revenues and making losses.

The price war lasted roughly for about 30 years until the death of all three – Henri, George, and Charles.

In 1905, the current directors of the companies agreed to halt their rivalry and combine their businesses for greater market share, revenues, and expanded reach over the globe.

As a result, Nestlé and Anglo-Swiss Condensed Milk Co. was founded – that eventually became Nestlé.

Certificate for 100 shares of the Nestlé and Anglo-Swiss Condensed Milk Co., issued 1. November 1918

Key takeaway 1: leave emotion out of strategy

For many years, Henri and the Page brothers went head to head in the milk industry, expanding into European markets, creating substitute rival products, adopting predatory pricing strategies, and undercutting price benchmarks. 

All this only yielded the worst for both businesses in the form of reduced revenues, higher price elasticity of demand, and a confused clientele.

Their saving grace was the strategic decision of the directors to call a truce and join forces – shared winners over lone losers. With the main competition becoming the same company, the focus was brought back to improving operations and opting for practices the business could sustain. Resultantly, the only path now was onwards and upwards.

This means foresight, strategy, and impartial business sense take priority over emotional responses, especially in the business world.

World War I, Government Contracts, & Innovative Strategies

Most companies take a few years to establish themselves in their local markets, minimizing risks. Only once they are comfortably settled and have enough brand appeal and resources to expand do they risk entering the global market.

But Nestle is not like most companies, is it?

Henri Nestle had become a big player in the Western Europe Market, and Page Brothers were leading the way in Britain. Thus, the merger already allowed Nestle to be the go-to condensed milk brand.

From there, it was always going to spread itself and capture as much of the global share as it could, and so it did. Within a decade, this newly merged company had taken its operations around the world, establishing factories in the UK, Europe, the United States, and Asia.

An unexpected opportunity

WWI broke out in 1914, and the scale of disruption around the globe was huge.  Almost every industry was affected. Some thrived and grew, but many collapsed or barely survived.

Nestle also faced an initial period of hardship where it was difficult to maintain its supplies due to severe shortages, and maintaining a smooth distribution network in Europe was near impossible. Hence, most of their supplies ran out of catering to the needs of locals.

However, the war presented a unique opportunity. The demand for milk shot up, and consequently, governments around the world sought contracts with major milk producers and distributors.

Nestle acquired several of these contracts that enabled it to not only come out of the difficult situation it was in but also rapidly expand its operations. It developed most of its factories in the US, where supply and distribution were easier, and recovery began. In fact, by the end of the war, the company had over 40 factories in the world, nearly doubling Nestlé’s overall production.

Moving forward by embracing innovation

Of course, the circumstances around WWI were unusual and worked in favor of Nestle. But it wasn’t the only reason the firm grew at such a pace. Research and innovation had defined the companies that came together to form Nestle. Hence, the same qualities were inherited and ingrained in Nestle. At a time where global infrastructure was going through a phase of transformation, Nestle was at the forefront of it utilizing it and spreading it.

For instance, railways and steamships were the new business logistics, and they became the company’s ticket into established and untapped urban markets overseas. Print media became the main face of modern marketing. Nestle cleverly capitalized on it by projecting its brand through newspapers, magazines, and billboards. The adverts focused on what made the company stand out: quality, taste, nutrition, safety, and affordability – characteristics Nestle still proudly stands by.

All while these advancements were being embraced, Nestle didn’t lose sight of what they were truly about: their products. Hence, as far as production is concerned, they continued to introduce more efficient methods in their factories, expanding their capacity and boosting quality.

Key takeaway 2: growth follows the ambitious

Both World Wars were make-or-break events. From a decrease in demand to a disruption in supply, Nestle faced all sorts of challenges. But Nestle, even before it merged, was always looking for opportunities to grow, and the government contracts gained during the war were essentially the result of it. If Nestle didn’t have its operations worldwide, it would never have captured the governmental radar. It may have survived the shortage; it may not have.

These contracts allowed the company to grow, which worked perfectly with its innovative strategies, such as tapping urban markets and marketing using print media to enhance the brand appeal and create brand affinity. This highlights the importance of being proactive and always looking for potential opportunities, even in challenging times. 

World Wars & Expanding The Product Portfolio

1918 , the year WWI finally ended.

The fighting did stop, but the unstable economic situation the world was in couldn’t be fixed easily. Nestle’s government contracts were up, and it found itself amongst the many companies facing the force of the crisis. To add to their difficulties, consumers that had shifted to condensed milk during the war shifted back to fresh milk as supply resumed.

The company went into a loss for the first time in 1921 .

Timely response

At that point, sales were down, and production costs were high for Nestle. Its operations needed an overhaul to reach sustainability. For this purpose, Swiss banker Louis Dapples was handed the task of reorganizing the company.

Not only was he able to match production and sales, but the move also helped Nestle clear its outstanding debt. Thereafter, the company spent a good part of the decade staying afloat and focusing on sustaining its operations.

More than a milk company

First milk, and then condensed milk; despite having a global reach, Nestle hadn’t really made an effort to expand its product portfolio.

Perhaps, till the 1920s , it had never felt the need to. It had been growing at a rapid pace and adding several countries to its customer base. Now, as growth stagnated and consumer demand shifted to fresh milk, something different had to be done.

Thus, they made a series of acquisitions that opened their doors to new industries, the most notable of which was the Kohler Swiss Chocolate company in the mid-1920s . Consequently, chocolate became the second most important product of Nestle.

‍ Nestlé buys Switzerland's largest chocolate company Peter-Cailler-Kohler

Alongside chocolate, the company also introduced malted milk, a powdered beverage named Milo, and powdered buttermilk for small children.

Malted chocolate drink Milo launches in Australia

The Nescafe revolution

The chocolate business was going well for Nestle, but they were yet to launch the product that would change the company’s future forever.

In 1930 , the Brazilian Coffee Institute approached the company with a unique problem. Brazil had a huge surplus of coffee, but there was no real demand or use at the time. Nestle spent the next 8 years researching and experimenting with products to develop from this coffee.

While the Brazilians suggested coffee cubes, Nestle had a better idea instead.

Voila, in 1938 , Nestle launched “Nescafe” an instant soluble coffee solution, the first of its kind and one of the most popular Nestle products to date. This was later followed by Nestea, another incredibly popular product that continues to drive the tastes of many across the globe today.

Nestlé launches NESCAFÉ in Switzerland on 1 April 1938

The USA again becomes the helping hand

There was immense potential in Nescafe, but at the same time, Nestle began to experience the severe impacts of WWII even before it broke into a worldwide conflict. The company’s revenues nosedived from $20 million in 1938 to $6 million in 1939 .

Although Switzerland remained neutral in both world wars, the situation in Europe was highly volatile, and business could not be conducted normally. Again, Nestle looked towards America by shifting its base of operations to Connecticut, far away from the conflict.

Their previous experience during WWI had allowed the company to form healthy relationships with the states, which helped them settle in. Unfortunately, the USA could not stay away from the war for too long and joined the allies in 1941 .

For Nestle, it was a complete blessing; Nescafe became a staple food for the US military as it was easily preservable, and the taste has already become a hit. Hence, without having to spend a fortune on advertisements, the coffee product penetrated worldwide, and funnily, its first brand ambassadors were allied soldiers.

Nestle sent tons and tons of Nescafe to the frontlines and managed to turn around their sales completely. From making $100 million in 1938 to reaching up to $225 million in 1945 .

Key takeaway 3: diversify and innovate

The end of WWI and the economic depression brought by it made life difficult for almost every business, including Nestle. Plus, the fact that customers preferred fresh milk instead of condensed milk meant that Nestle found it difficult to sustain its business. 

Customers’ demands and preferences, as well as the market scenarios, can change drastically over time. Nestle learned that they needed to be flexible enough to adapt and bold enough to take risks. Otherwise, they will be left with no choice but to shut up shop. 

This is when the milk company gradually began expanding by introducing new products and exploring new markets. It, in turn, allowed the company to grow despite the difficult situation.

Hence, companies should never rest on their laurels and try to improve consistently, be it by innovating, branching out, and increasing the quality and quantity of products or services they offer.

Growth Through Acquisitions and Diversification

The end of the world war had set the perfect stage for Nestle to take its business to the next level. Sales were at an all-time high, Nescafe and Nestea were making waves, and through military and government supports, the company had opened up new markets for its products.

On top of it, the world did not go into a similar depression like WWI. Instead, it marked a period of stability and peace, one which firms everywhere looked to capitalize on. Likewise, Nestle did not waste any time in getting in on the action and making some very key and monumental moves. In fact, these post-war years are often termed as the most dynamic period in the company's history!

Seasoned Maggi Soups and Broadein Food Products

As the world recovered from the war, Nestle followed an aggressive acquisition policy acquiring multiple brands worldwide. The most significant name it added to its portfolio was fellow Swiss company, Maggi.

The journey for this soup and noodles company started somewhat around the same time as that of Henri Nestle. Its founder, Julius Maggi shared the same vision of serving nutritious yet convenient foods to the public.

After the war, in 1947 , Maggi went through a number of restructurings and changes in leadership. Resultantly, the best way for the company to move forward was to join hands with Nestle. Their established factories in numerous countries introduced the Maggi brand to the world, and it became a sensation. In fact, in many Asian regions, Maggi is synonymous with instant noodles.

The Magic of Maggi

Following Maggi’s acquisition, Nestle took over several other firms in the food industry, including:

• 1960 : Crosse & Blackwell, a British can and preserved food manufacturer
• 1963 : Findus, a Swedish frozen food company
• 1971: American fruit juices company Libby
• 1973: Stouffer, a frozen and prepared foods brand

With these moves, Nestle extended its product range and established a stronghold in the preserved foods industry.

Developing new & improving existing “convenience” products

While Nestle spread its wings by bringing other brands under its umbrella, it did not lose sight of the products it developed itself.

For instance, the Nescafe coffee, which had been a huge success during the war, continued its astonishing path upwards. From 1950 to 1959 , its sales almost tripled, and with the development of an anti-freeze version in 1966 , its sales quadrupled in the next decade.

Simultaneously, Nestle also worked on launching new products. In 1948 , it further embedded itself in American households with Nesquik, a chocolate powder that would instantly mix in cold milk. 

Owing to the product’s success, they even introduced the Nesquik Bunny to win over both adults and children.

During the same time, Nestle rebranded its infant cereals as Cerelac while launching an extensive range of canned foods under Maggi.

Diversifying beyond the food industry

By the 1970s , Nestle had well and truly occupied a dominant position in the food industry. It was now time to step out of the comfort zone and venture into new industries.

The big break came in 1974 when Nestle made a move for a Parisian hair care company, L'Oréal. Established in 1909 , this company had gone from making hair dyes to a full range of cosmetic care products. It has also formed a loyal customer base in France.

With big plans, Nestle offered the family owners of L'Oréal a 3% stake in Nestle in return for a 50% share. The offer was too attractive to refuse, and the two companies entered into a new partnership. This merger reaped multifold returns for both parties, and by the 1980s , the brand was the leader in its industry.

The cosmetic arena wasn’t the only one Nestle aimed to capture. There was an economic slowdown and general volatility between the French and Swiss markets. The price of cocoa and coffee went up more than three times. Nestle decided to take a risk and leap into waters it had never been in before.

In 1977 , it also became the owner of the American pharmaceutical company, Alcon. This, too, was a success with the brand operating in 75+ countries and being sold more than twice that number.

Merger to remember & the future of coffee

Nestle never looked to slow down despite its numerous acquisitions and diverse brand offerings.

In 1984 , it offered a mind-blowing $3 billion to buy out the food company, Carnation. Many believe this to be one of the largest acquisitions outside the oil industry – at least at the time. The scale of the deal was such that it took a year for it to be approved and finalized.

It wasn’t just being in the same industry that sparked Nestle’s interest; it was also the fact that Carnation had a diverse portfolio, including a profitable pet food brand, Friskies, and Contadino tomato products.

Nestle also added UK confectionery company Rowntree Mackintosh to its list of acquisitions in 1988 , giving it ownership of popular chocolates, Kitkat and Smarties. In the same year, it also included Buitoni-Perugina, a major Italian pasta and confectionery company to its mix.

Alongside the mergers, Nestle was also actively working on making a comeback with its coffee products. Thus, in 1986 , it rolled out Nespresso, a premium version of its coffee, different from the previous freeze-dried budget version. The idea behind it was simple: present a DIY system for any person who wanted to enjoy luxury coffee.

Key takeaway 4: seek opportunities in both new and existing industries

Many firms that plan to diversify their portfolios lose grip on their main industry. Nestle wasn’t one of them. Its initial strategy for growth post-WWII was to cement its hold in the food industry with a series of acquisitions and new product offerings. Then, it made its move in other industries while still improving on its basic offerings of food, coffee, and chocolate-related products.

Nestle grew exponentially by tactfully merging and acquiring companies it thought would add value to its brand. This paid off handsomely and turned Nestle into a force to be reckoned with. It highlights the need for brands to enhance their value offerings, using whatever means they have at their disposal, right from diversifying to collaborating with others.

International Force - Nestle's Global Strategy

With the fall of the Berlin wall in 1989, markets in Central and Eastern Europe, as well as China opened up. Trade barriers disintegrated, liberalization picked up the pace, and economic markets around the globe started to integrate well.

This proved to be quite beneficial for Nestle. There were new diverse markets to expand to and favorable policies that encouraged them – not that they needed any second invitation. 

Onwards & upwards with tactful acquisitions

From the late 1990s to the late 2000s, Nestle went on an aggressive acquisition spree and acquired the following companies:

• San Pellegrino group , the leading Italian mineral water business, in 1998 paved the way for Nestle to launch Nestle Pure Life and lead in Europe while making a way into developing countries worldwide.
• Spillers Petfoods in 1998 enabled Nestle to cement its position as a key player in the pet food business around the globe and Europe in particular.
• Ralston Purina , U.S.'s pet food business, in 2002 and merged with Nestlé Friskies Petcare, creating a market leader in the pet care industry, Nestlé Purina Petcare.
• The U.S. ice cream business merged with Dreyer's in 2002, establishing Nestle as the leader in the U.S., the world's largest ice cream market. 
• Movenpick Ice Cream in 2003 to complement Nestle's super-premium ice cream brands portfolio in North America and Italy.
• Delta Ice Cream in 2005 as Nestle's realized that the ice cream business was a profitable opportunity and the company could make inroad in the growing Greek and Balkans ice cream market.
• Chef America Inc in 2002 as Nestle continued with its horizontal integration and expanded into the frozen foods market, which was growing.
• Jenny Craig and Uncle Toby's in 2006 as Nestle wanted to stay true to its commitment to nutrition, health, and wellness and reinforce its presence in the U.S., the world's largest nutrition and weight management market.
• Medical Nutrition division of Novartis Pharmaceutical in 2007 as it was complementary to Nestle's Healthcare Nutrition Business and enhanced Nestle's capabilities to cater to the needs of its customers with special nutritional requirements.
• Henniez in 2007 to augment its position in the competitive Swiss bottled water market, leveraging the solid industrial capacity and distribution network of the company.
• Gerber , the iconic U.S. baby food brand, in 2007 became the number 1 player in the U.S., the world's largest baby food market, transforming Nestle Nutrition into a global leader.

A number of other partnerships were also made, such as the one with Belgian chocolatier Pierre Marcolini , helping Nestle augment its position in the food and nutrition industry while allowing it to diversify in health, wellness, and beauty.

Now, why did Nestle do that?

The answer is to remain attuned to the changing consumer tastes and remains ahead in a market that never stays still.

Sure, continuous innovation is essential, but Nestle didn't just rely on that and continued to acquire businesses and benefit from synergies to become the undisputed leader in the business world.

All this while, Nestle has remained true to its roots and continued to delight its customers worldwide.

Realizing that with expanding its global footprint, there was bound to be an array of issues that it needed to deal with effectively, Nestle launched a Group-wide initiative called GLOBE (Global Business Excellence) .

The primary purpose behind this initiative was to harmonize and simplify business processes and empower Nestle to make the most of its competitive advantage while alleviating the risks and drawbacks.

Key takeaway 5: growth & diversification through acquisition

From San Pellegrino in 1997 to Henniez and Gerber in 2007, Nestle's relentless strategy to acquire an array of businesses in different markets, ranging from pet care and baby food to ice cream and bottled water, strengthened its overall position and breathed new life into the company.

Nestle not only wanted to expand to new product lines but also become the market leader in all of them, in different parts of the world. The fastest and most effective way to do just that was through strategic acquisitions. 

In an ever-evolving market, staying still or focusing solely on a select few activities is risky for large businesses. The key, at times, to grow is to embrace an external growth strategy by acquisitions in different industries with distinctive lines of business.

Commitment To Innovation

Nestle stays firmly committed to its goals of helping people, families, and pets around the globe live happier and healthier lives. From meeting the ever-evolving needs of the modern consumer to providing safe and premium-quality of food on-demand, Nestle does it all.

However, it understands that dramatic shifts are happening in the market with consumer demands dynamically changing, new entrants offering endless choices, and people living and shopping in ways never seen before.

Winning in such an environment requires disruption and a hybrid-growth model. No one understands that better than Nestle, and here’s how it is driving value from its base portfolio while embracing new ventures to scale up.

Nestle: 150-year-old start-up innovating from within

Unlike other business entities that outsource the innovation part and fail to prepare for the future, Nestle has strategically decided to combine its scale and capabilities with the mentality and speed of a start-up.

InGenius , Nestlé's employee innovation accelerator, is the ultimate platform that encourages intrapreneurship within the company. Internal start-ups within the company are launched , and employees are encouraged to think big and creatively.

Moreover, Nestle’s global R&D accelerator program brings together scientists, students, and employees, empowering them to come up with new innovative products.

Lean designs, fast prototyping, quick testing, continuous hustling, and room for big risks make the incubator program a success. The goal of the internal start-ups is to help promptly develop new product lines from scratch within 9 months, paving the way for the future of food.

What’s more is that employees are given challenges to solve, ranging from improving the quality of food to helping achieve the net-zero target. On top of this, Nestle also helps young social entrepreneurs, outside its fold, by offering them holistic support, mentorship, and access to its R&D and innovation experts by partnering up with Ashoka – an organization that identifies and supports social entrepreneurs.

Rethinking & reinventing

To better tap into today’s consumer trends, Nestle goes the extra mile to revive the brands with modern innovation.

It does this by introducing new varieties of products and adding unique flavors to attract new customers and retain existing ones. For instance, in 2017 alone, Nestle launched 1000 new products. Yes, that’s right!

From bringing in new flavors of juices and milk to launching frozen organic meals and non-dairy desserts, among others, it tries its best to exceed its customers’ expectations.

Enhancing capabilities

Fueling growth through innovation and improving operational efficiency are two key components of Nestle’s value creation model.

While innovation is considered everyone’s job at Nestle , increasing operational efficiency is also stressed.

Each and every aspect of the business, be it hiring people, using data analytics to make decisions based on logic, optimizing supply chains, or deploying manufacturing solutions, is reviewed and revamped to increase efficiency and deliver desired business outcomes.

Future of food

Nestle, together with Swiss academic and industrial partners such as ETH Zurich, Ecole Polytechnique Fédérale de Lausanne (EPFL), and companies Bühler and Givaudan, announced a joint research program, Future of Food , that will help develop nutritious, tasty, sustainable, and trendy food and beverage products.

It's just another example of Nestle leveraging innovation and partnerships to move forward. Plus, it highlights Nestle’s commitment to providing healthy food while doing right by the environment.

The future is healthy, sustainable, and personalized

Nestle is actively working on providing healthier diets to people worldwide. It's even reformulating its popular products such as Kit Kat and Maggi, among others, to reduce the sugar, salt, and saturated fat in them while also transitioning its brands towards organic.

In addition to this, it is actively working towards ensuring its supply chains have zero environmental impact and reducing its carbon footprint by changing its plastic packaging.

Nestle has announced that it will phase out all packaging that’s not recyclable by 2025 and ensure the packaging it uses is eco-friendly.

Last but not least, Nestle, in its quest to stand out and scale, is emphasizing the need to please customers in every way possible. It aims to do that by delivering customers exactly what they want, how they want it, and in the taste, and shape they want it.

Meeting the needs of consumers on an individual level, according to Nestle will make all the difference. Hence, it is investing in it. Nestle acquired a start-up in UK, Tails.com, which provides tailored diets to dogs on a monthly basis based on age, breed, and weight among other factors.

Key takeaway 6: innovate, innovate, and innovate

Ascending to the top is one thing, but remaining at the top is the real challenge. Nestle’s strategy of launching incubators, experimenting with products, enhancing capabilities, and thinking ahead to create a new future highlights the importance the company places on innovation.

Nestle never hesitates to be bold and go out of its way to innovate to accelerate its growth and achieve scale. It realizes the value that can be derived from innovation and hence, leaves no stone unturned in thinking out of the box and putting its money where its mouth is.  More than anything else, this fundamental strategy has helped the company dominate and remain a customer favorite.

Nestle In The New Normal

Nestle: the multi-national company that adapts

A vital company in the challenging times of Covid-19, Nestle made many changes in its processing and manufacturing processes to continue supplying good food. As supply chain challenges intensified, Nestle focused its efforts on streamlining the supply chain end-to-end, from sourcing supplies to logistics. 

Nestle had 8.1% organic growth in the first half of its fiscal year 2022.

Nestle: the best employer

Making the health and safety of its employees a priority, Nestle implemented enhanced safety measures on and off its premises, including factories, distribution centers, labs, and offices.

Nestle responded to Covid-19 effectively and made sure its employees are protected and motivated by:

• Allowing working from home 
• Restricting travel and exposure to the virus
• Introducing the best hygiene practices
• Implementing effective social distancing measures
• Giving a special 14-day COVID-19 leave
• Offering financial support in the form of loans

Nestle: the company that gives back to the community

Nestle extended a helping hand to those in need in the crisis. It provided holistic support to medical institutions, food banks, food delivery organizations, and relief organizations in the local communities who are on the frontline. 

Not only did Nestle donate essentials such as food and bottled water but also money. Nestle joined forced with the International Federation of the Red Cross and Red Crescent Societies (IFRC) and donated  CHF 10 million . Plus, in order to speed up the vaccination and ensure fair distribution of vaccines, it partnered up with COVAX and donated  CHF 2 million. 

Key takeaway 7: stay resilient 

There’s no doubt that the Covid-19 pandemic disrupted the global markets and adversely impacted Nestle in ways more than one. However, Nestle managed to survive and thrive by continuously adapting, being proactive, and striving to do right by the people and the communities it served, as evident from its increased market share and growth during the period.

Nestle in a nutshell

Nestle products are recognized, consumed, and valued in all corners of the world. It is a company that has ingrained itself in the day-to-day life of people and continues to raise the bar higher. From innovation, people management, and a long-term strategic approach to the quality of products and services, social responsibility, and competitiveness, Nestle ticks all the boxes.

Here are the four main lessons derived from the growth of Nestle from a relatively small Swiss-based company established in 1866 to one of the most successful, admired, and profitable multinational companies in the world:

Key takeaway 1: globalize but also localize

A company as big as Nestle, which operates in almost all countries worldwide, has achieved success by localizing its offerings and catering to the needs of each individual market.

Sure, it could have made generalized global strategies and campaigns, but it took the difficult path by localizing everything from sourcing, product planning, production, marketing, and even its brand strategy.

It highlights the importance of being customer-centric regardless of who you are as a company and where you operate.

Key takeaway 2: innovate – change is an opportunity

Whether it be changing consumer demands, the evolving marketplace, or crisis situations, Nestle has never stopped innovating. Sure, it has paid the price of a few campaigns gone wrong, but one thing that it has been relentless at is continuing to strive to be a step ahead.

Nestle does it all, from committing to sustainability to coming up with new creative ways of providing more value to all stakeholders. It serves as a lesson for brands in this modern digital age. You can only survive and succeed if you innovate. Period.

Key takeaway 3: grow through acquisitions

Nestle has over 2000 brands. Yes, that’s right. Nestle has rapidly grown, gained a competitive advantage, increased its market share, achieved synergies, and enhanced efficiency in its business by acquiring companies.

It actively looks for potential acquisition opportunities and doesn’t hesitate to take risks. This showcases that if you want to grow as a company, you need to broaden your horizons and partner up with others. Foresight, strategic decisions, and impartial business sense are critical - now more than ever. 

The external growth strategy has worked wonders for Nestle by allowing it to expand into new industries and distinctive production lines - all of which have contributed immensely to its growth over the years. Simply put, if you can’t beat them, just join them, or well, in Nestle’s case, buy them.

Key takeaway 4: importance of brand & values

As a company, your values are bigger than your revenue. If you truly focus on and stick to your values, you can attract consumers and scale your company. Nestle has done just that by not only saying but becoming the “Good food, Good Life” company.

It firmly abides by its core principles of “ Unlocking the power of food to enhance the quality of life for everyone, today and for generations to come .”

Every decision that is made, every product that is launched, every customer that is served, is served to shape a better and healthier world. No wonder Nestle has become a global icon from a local favorite.

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Case Study: Nestle’s Growth Strategy

Nestle is one of the oldest of all multinational businesses. The company was founded in Switzerland in 1866 by Heinrich Nestle, who established Nestle to distribute “milk food,” a type of infant food he had invented that was made from powdered milk, baked food, and sugar. From its very early days, the company looked to other countries for growth opportunities, establishing its first foreign offices in London in 1868. In 1905, the company merged with the Anglo-Swiss Condensed Milk, thereby broadening the company’s product line to include both condensed milk and infant formulas. Forced by Switzer ­land’s small size to look outside’ its borders for growth opportunities, Nestle established condensed milk and infant food processing plants in the United States and Britain in the late 19th century and in Australia, South America, Africa, and Asia in the first three decades of the 20th century. In 1929, Nestle moved into the chocolate business when it acquired a Swiss chocolate maker. This was fol ­lowed in 1938 by the development of Nestle’s most rev ­olutionary product, Nescafe, the world’s first soluble coffee drink. After World War 11, Nestle continued to expand into other areas of the food business, primarily through a series of acquisitions that included Maggi (1947), Cross & Blackwell (1960), Findus (1962), Libby’s (1970), Stouffer’s (1973), Carnation (1985), Rowntree (1988), and Perrier (1992). By the late 1990s, Nestle had 500 factories in 76 countries and sold its products in a staggering 193 nations-almost every country in the world. In 1998, the company generated sales of close to SWF 72 billion ($51 billion), only 1 percent of which occurred in its home country. Similarly, only 3 percent of its- 210,000 employees were located in Switzerland. Nestle was the world’s biggest maker of infant formula, powdered milk, chocolates, instant coffee, soups, and mineral waters. It was number two in ice cream, breakfast cereals, and pet food. Roughly 38 percent of its food sales were made in Europe, 32 percent in the Americas, and 20 percent in Africa and Asia.

Management Structure

Nestle is a decentralized organization . Responsibility for operating decisions is pushed down to local units, which typically enjoy a high degree of autonomy with regard to decisions involving pricing, distribution, marketing, human resources, and so on. At the same time, the company is organized into seven worldwide strategic business units (SBUs) that have responsibility for high-level strategic decisions and business development. For example, a strategic business unit focuses on coffee and beverages. Another one focuses on confectionery and ice cream. These SBUs engage in overall strategy development, including acquisitions and market entry strategy. In recent years, two-thirds of Nestle’s growth has come from acquisitions, so this is a critical function. Running in parallel to this structure is a regional organization that divides the world into five major geographical zones, such as Europe, North America and Asia. The regional organizations assist in the overall strategy development process and are responsible for developing regional strategies (an example would be Nestle’s strategy in the Middle East, which was discussed earlier). Neither the SBU nor regional managers, however, get involved in local operating or strategic decisions on anything other than an exceptional basis.

Although Nestle makes intensive use of local managers to knit its diverse worldwide operations together, the company relies on its “expatriate army.” This consists of about 700 managers who spend the bulk of their careers on foreign assignments , moving from one country to the next. Selected primarily on the basis of their ability, drive and willingness to live a quasi-nomadic lifestyle, these individuals often work in half-a-dozen nations during their careers. Nestle also uses management development programs as a strategic tool for creating an esprit de corps among managers. At Rive-Reine, the company’s international training center in Switzerland, the company brings together, managers from around the world, at different stages in their careers, for specially targetted development programs of two to three weeks’ duration. The objective of these programs is to give the managers a better understanding of Nestle’s culture and strategy, and to give them access to the company’s top management.

The research and development operation has a special place within Nestle, which is not surprising for a company that was established to commercialize innovative food stuffs. The R&D function comprises 18 different groups that operate in 11 countries throughout the world. Nestle spends approximately 1 percent of its annual sales revenue on R&D and has 3,100 employees dedicated to the function. Around 70 percent of the R&D budget is spent on development initiatives. These initiatives focus on developing products and processes that fulfill market needs, as identified by the SBUs, in concert with regional and local managers. For example, Nestle instant noodle products were originally developed by the R&D group in response to the perceived needs of local operating companies through the Asian region. The company also has longer-term development projects that focus on developing new technological platforms, such as non-animal protein sources or agricultural biotechnology products.

A Growth Strategy for the 21 st Century

Despite its undisputed success, Nestle realized by the early 1990s, that it faced significant challenges in maintaining its growth rate. The large Western European and North American markets were mature. In several countries, population growth had stagnated and in some, there had been a small decline in food consumption. The retail environment in many Western nations had become increasingly challenging and the balance of power was shifting away from the large-scale manufacturers of branded foods and beverages, and toward nationwide supermarket and discount chains. Increasingly, retailers found themselves in the unfamiliar position of playing off against each other – manufacturers of branded foods, thus bargaining down prices. Particularly in Europe, this trend was enhanced by the successful introduction of private-label brands by several of Europe’s leading supermarket chains. The results included increased price competition in several key segments of the food and beverage market, such as cereals, coffee and soft drinks.

At Nestle, one response has been to look toward emerging markets in Eastern Europe, Asia and Latin America for growth possibilities. The logic is simple and obvious – a combination of economic and population growth, when coupled with the widespread adoption of market-oriented economic policies by the governments of many developing nations, makes for attractive business opportunities. Many of these countries are still relatively poor, but their economies are growing rapidly. For example, if current economic growth forecasts occur, by 2010, there will be 700 million people in China and India that have income levels approaching those of Spain in the mid-1990s. As income levels rise, it is increasingly likely that consumers in these nations will start to substitute branded food products for basic foodstuffs, creating a large market opportunity for companies such as Nestle.

In general, Nestle’s growth strategy had been to enter emerging markets early – before competitors – and build a substantial position by selling basic food items that appeal to the local population base, such as infant formula, condensed milk, noodles and tofu. By narrowing its initial market focus to just a handful of strategic brands, Nestle claims it can simplify life, reduce risk, and concentrate its marketing resources and managerial effort on a limited number of key niches. The goal is to build a commanding market position in each of these niches. By pursuing such a strategy, Nestle has taken as much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered milk in the Philippines, and 70 percent of the markets for soups in Chile. As income levels rise, the company progressively moves out from these niches, introducing more upscale items, such as mineral water, chocolate, cookies, and prepared foodstuffs.

Although the company is known worldwide for several key brands, such as Nescafe, it uses local brands in many markets. The company owns 8,500 brands, but only 750 of them are registered in more than one country, and only 80 are registered in more than 10 countries. While the company will use the same “global brands” in multiple developed markets, in the developing world it focuses on trying to optimize ingredients and processing technology to local conditions and then using a brand name that resonates locally. Customization rather than globalization is the key to the Nestle’s growth strategy in emerging markets.

Executing the Strategy

Successful execution of the strategy for developing markets requires a degree of flexibility, an ability to adapt in often unforeseen ways to local conditions, and a long-term perspective that puts building a sustainable business before short-term profitability. In Nigeria, for example, a crumbling road system, aging trucks, and the danger of violence forced the company to re-think its traditional distribution methods. Instead of operating a central warehouse, as is its preference in most nations, the country. For safety reasons, trucks carrying Nestle goods are allowed to travel only during the day and frequently under-armed guard. Marketing also poses challenges in Nigeria. With little opportunity for typical Western-style advertising on television of billboards, the company hired local singers to go to towns and villages offering a mix of entertainment and product demonstrations.

China provides another interesting example of local adaptation and long-term focus. After 13 years of talks, Nestle was formally invited into China in 1987, by the Government of Heilongjiang province. Nestle opened a plant to produce powdered milk and infant formula there in 1990, but quickly realized that the local rail and road infrastructure was inadequate and inhibited the collection of milk and delivery of finished products. Rather than make do with the local infrastructure, Nestle embarked on an ambitious plan to establish its own distribution network, known as milk roads, between 27 villages in the region and factory collection points, called chilling centres. Farmers brought their milk – often on bicycles or carts – to the centres where it was weighed and analysed. Unlike the government, Nestle paid the farmers promptly. Suddenly the farmers had an incentive to produce milk and many bought a second cow, increasing the cow population in the district by 3,000 to 9,000 in 18 months. Area managers then organized a delivery system that used dedicated vans to deliver the milk to Nestle’s factory.

Although at first glance this might seem to be a very costly solution, Nestle calculated that the long-term benefits would be substantial. Nestle’s strategy is similar to that undertaken by many European and American companies during the first waves of industrialization in those countries. Companies often had to invest in infrastructure that we now take for granted to get production off the ground. Once the infrastructure was in place, in China, Nestle’s production took off. In 1990, 316 tons of powdered milk and infant formula were produced. By 1994, output exceeded 10,000 tons and the company decided to triple capacity. Based on this experience, Nestle decided to build another two powdered milk factories in China and was aiming to generate sales of $700 million by 2000.

Nestle is pursuing a similar long-term bet in the Middle East, an area in which most multinational food companies have little presence. Collectively, the Middle East accounts for only about 2 percent of Nestle’s worldwide sales and the individual markets are very small. However, Nestle’s long-term strategy is based on the assumption that regional conflicts will subside and intra-regional trade will expand as trade barriers between countries in the region come down. Once that happens, Nestle’s factories in the Middle East should be able to sell throughout the region, thereby realizing scale economies. In anticipation of this development, Nestle has established a network of factories in five countries, in the hope that each will, someday, supply the entire region with different products. The company, currently makes ice-cream in Dubai, soups and cereals in Saudi Arabia, yogurt and bouillon in Egypt, chocolate in Turkey, and ketchup and instant noodles in Syria. For the present, Nestle can survive in these markets by using local materials and focusing on local demand. The Syrian factory, for example, relies on products that use tomatoes, a major local agricultural product. Syria also produces wheat, which is the main ingredient in instant noodles. Even if trade barriers don’t come down soon, Nestle has indicated it will remain committed to the region. By using local inputs and focussing on local consumer needs, it has earned a good rate of return in the region, even though the individual markets are small.

Despite its successes in places such as China and parts of the Middle East, not all of Nestle’s moves have worked out so well. Like several other Western companies, Nestle has had its problems in Japan, where a failure to adapt its coffee brand to local conditions meant the loss of a significant market opportunity to another Western company, Coca Cola. For years, Nestle’s instant coffee brand was the dominant coffee product in Japan. In the 1960s, cold canned coffee (which can be purchased from soda vending machines) started to gain a following in Japan. Nestle dismissed the product as just a coffee-flavoured drink rather than the real thing and declined to enter the market. Nestle’s local partner at the time, Kirin Beer, was so incensed at Nestle’s refusal to enter the canned coffee market that it broke off its relationship with the company. In contrast, Coca Cola entered the market with Georgia, a product developed specifically for this segment of the Japanese market. By leveraging its existing distribution channel, Coca Cola captured a 40 percent share of the $4 billion a year, market for canned coffee in Japan. Nestle, which failed to enter the market until the 1980s, has only a 4 percent share.

While Nestle has built businesses from the ground up, in many emerging markets, such as Nigeria and China, in others it will purchase local companies if suitable candidates can be found. The company pursued such a strategy in Poland, which it entered in 1994, by purchasing Goplana, the country’s second largest chocolate manufacturer. With the collapse of communism and the opening of the Polish market, income levels in Poland have started to rise and so has chocolate consumption. Once a scarce item, the market grew by 8 percent a year, throughout the 1990s. To take advantage of this opportunity, Nestle has pursued a strategy of evolution, rather than revolution. It has kept the top management of the company staffed with locals – as it does in most of its operations around the world – and carefully adjusted Goplana’s product line to better match local opportunities. At the same time, it has pumped money into Goplana’s marketing, which has enabled the unit to gain share from several other chocolate makers in the country. Still, competition in the market is intense. Eight companies, including several foreign-owned enterprises, such as the market leader, Wedel, which is owned by PepsiCo , are vying for market share, and this has depressed prices and profit margins, despite the healthy volume growth.

Discussions:

• Does it make sense for Nestle to focus its growth efforts on emerging markets? Why?
• What is the company’s strategy with regard to business development in emerging markets? Does this strategy make sense? From an organizational perspective, what is required for this strategy to work effectively?
• Through your own research on NESTLE, identify appropriate performance indicators. Once you have gathered relevant data on these, undertake a performance analysis of the company over the last five years. What does the analysis tell you about the success or otherwise of the strategy adopted by the company?
• How would you describe Nestle’s strategic posture at the corporate level; is it pursuing a global strategy, a multidomestic strategy an international strategy or a transnational strategy?
• Does this overall strategic posture make sense given the markets and countries that Nestle participates in? Why?
• Is Nestle’s management structure and philosophy aligned with its overall strategic posture?

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• International Marketing

Nestlé’s Global Strategy: From Local Kitchens to International Giant

• April 12, 2024

Table of contents

Understanding nestlé’s global strategy for continued success, nestlé’s origins and rise to global leadership, nestlé’s business strategy: creating shared value, health and sustainability: a winning combination, data-driven decisions for targeted marketing, embracing e-commerce for growth, continuous product development, the importance of translation and localization in nestlé’s global strategy, expertise you can trust, cultural understanding and adaptation, multilingual project management, potential cost-effectiveness, opportunities, looking forward, navigating the future with a winning strategy, faqs: nestlé’s global strategy.

Nestlé, a household name synonymous with chocolate bars and instant coffee, is a global giant in the food and beverage industry. With a staggering presence in 188 countries, and boasting over 2,000 brands, understanding Nestlé’s global strategy is critical to its continued dominance ( Nestlé , 2024). This strategy is the roadmap that guides the company’s decisions, from product development to marketing campaigns across the world.

Nestlé’s success story spans over 150 years. In fact, the company’s market capitalization reached a staggering $389.43 billion as of January 4, 2022 ( YCharts , 2024). However, maintaining this level of success in a constantly evolving global marketplace requires a well-defined and adaptable strategy .

By delving into Nestlé’s global strategy, we can gain valuable insights into how this industry leader approaches :

• Meeting the needs of diverse consumers across the globe:  Nestlé caters to a wide range of dietary needs and taste preferences, ensuring its products resonate with people from all walks of life.
• Staying ahead of trends:  The company actively invests in research and development to create innovative products that cater to emerging consumer demands, such as the growing focus on health and wellness.
• Navigating a complex global landscape:  Nestlé operates in a world with diverse cultures, regulations, and economic conditions. A successful global strategy must take these factors into account to ensure smooth operations and market penetration.

Understanding Nestlé’s global strategy goes beyond mere business curiosity. It provides valuable lessons for any company seeking to expand its reach and achieve lasting success in the international marketplace . Throughout this article, we will dissect the key components of Nestlé’s strategy, analyze its strengths and weaknesses, and explore its potential impact on the future of the food and beverage industry.

Nestlé’s impressive global strategy has roots that stretch back to 1866. In that year, the Henri Nestlé Company emerged from a merger in Switzerland ( Nestlé , 2024). The company’s initial focus was on an innovative product—a milk formula specifically designed for infants who could not breastfeed. This early success laid the foundation for a key element of Nestlé’s enduring strategy: a commitment to innovation that meets consumer needs .

However, the path to global leadership wasn’t without its challenges. Competition from established companies and the disruptions of two world wars forced Nestlé to adapt and evolve. The company met these challenges head-on, demonstrating the importance of flexibility in its global strategy.

Through these early years, Nestlé identified several key principles that would propel it towards global leadership :

• Globalization: Nestlé recognized the potential of expanding beyond its Swiss origins. Early international ventures helped establish the foundation for its vast global presence today.
• Innovation: The company’s commitment to developing new products, like the aforementioned infant formula, not only addressed specific consumer needs but also opened doors to new markets.
• Acquisitions: Strategic acquisitions allowed Nestlé to broaden its product portfolio and gain a foothold in new markets. This tactic continues to play a role in Nestlé’s global strategy today.
• Brand Value: Nestlé consistently prioritized quality, taste, nutrition, safety, and affordability in its products. Building a strong brand reputation became a cornerstone of its success.

These core principles weren’t just window dressing for Nestlé’s early years. They were the tools that helped them weather the storms of those early days and ultimately pave the way for their global food and beverage empire. Even today, these same principles are woven into the fabric of Nestlé’s global strategy, offering valuable lessons for any company aiming to replicate their international success story.

Nestlé’s global strategy goes beyond just profit. The company operates under a philosophy they call “creating shared value,” which emphasizes creating benefits for both society and shareholders . This approach recognizes that a company’s success is intertwined with the well-being of the communities it serves and the environment it operates within.

One of the central pillars of Nestlé’s strategy is a focus on nutrition, health, and wellness. The company invests heavily in research and development to create nutritious and delicious food and beverage options for people of all ages. This aligns with the growing global focus on healthy living , demonstrating how Nestlé’s strategy adapts to meet consumer demands.

Sustainability is another key element of Nestlé’s approach. The company has set ambitious goals for reducing greenhouse gas emissions and using sustainable packaging. This commitment reflects a growing awareness of environmental responsibility and positions Nestlé as a leader in sustainable practices within the food and beverage industry .

Despite its focus on these broader goals, Nestlé hasn’t lost sight of its core business. The company boasts a vast and diverse product portfolio that caters to a wide range of consumer preferences. From global favorites like KitKat and Nescafé to regional brands like Perrier, Nestlé’s products are enjoyed by people around the world.

By creating shared value, Nestlé aims to build a sustainable future for its business and the communities it touches. This focus on social and environmental responsibility alongside strong brand recognition and product development positions Nestlé as a powerful force in the global food and beverage industry .

Nestlé’s Growth Strategy: Driving Success in a Digital Age

Nestlé’s global strategy isn’t static. The company recognizes the need for continuous growth and adaptation to stay ahead in the competitive food and beverage industry. Here, we see a strong focus on two key areas: health and sustainability, both of which are major drivers of consumer choices today .

Nestlé leverages its commitment to health and sustainability throughout its growth strategy. This focus allows the company to develop products that meet the growing demand for nutritious and environmentally responsible choices . For instance, Nestlé might introduce new milk products containing prebiotic fibers, catering to consumers interested in gut health. This approach positions Nestlé as a leader in innovation that aligns with evolving consumer preferences.

In today’s digital age, data plays a crucial role in Nestlé’s growth strategy. The company utilizes data and analytics to gain valuable insights into consumer behavior. This information allows for targeted marketing campaigns that resonate with specific demographics and preferences . By understanding their customers better, Nestlé can ensure its marketing efforts are effective and reach the right audience.

Nestlé recognizes the growing importance of e-commerce in the food and beverage industry. The company is actively investing in this channel to expand its online presence and drive sales growth. Initiatives like the e-commerce academy demonstrate Nestlé’s commitment to training and equipping its teams for success in the digital marketplace .

Nestlé’s growth strategy is fueled by ongoing product development. The company dedicates resources to research and development, creating innovative new products that cater to evolving consumer needs and market trends. This focus ensures Nestlé’s product portfolio remains fresh and relevant , keeping the company at the forefront of the food and beverage industry.

Nestlé’s global strategy isn’t a one-trick pony. They’re doubling down on health and sustainability, while also using smart marketing with data to reach the right customers. They’re investing heavily in e-commerce to keep up with how people shop today, and never stop developing new products to keep things fresh. This focus on innovation and adapting to change positions Nestlé for long-term success in a fast-paced global market.

For a company like Nestlé, with a presence in 188 countries, translation and localization are not just afterthoughts—they are cornerstones of its global strategy. Effective communication that resonates with local cultures is critical to fostering brand loyalty and driving sales success across the globe .

Imagine a KitKat commercial featuring a festive red Santa Claus during the peak summer months in Australia. This cultural misstep, while seemingly minor, could create confusion and ultimately harm brand perception .

The challenges of transcreating marketing messages and packaging go beyond simple language translation. Effective localization considers cultural nuances, humor, imagery, and even colors that may have different meanings in various regions. A successful global strategy, like Nestlé’s, requires meticulous attention to these details.

Cultural sensitivity is paramount. Nestlé understands that a “one size fits all” approach to marketing simply won’t work . By utilizing translators and localization experts who understand the cultural context of each target market, Nestlé can ensure its messaging is sensitive and respectful.

At the same time, maintaining brand consistency is crucial. While adapting marketing materials, Nestlé strives to preserve the core brand identity and values that resonate with consumers worldwide . This balance between cultural sensitivity and brand consistency is a hallmark of Nestlé’s successful translation and localization efforts.

Technology plays an increasingly important role in translation and localization processes. Machine translation tools can provide a solid foundation, but human expertise remains essential for ensuring accuracy and cultural appropriateness . Nestlé likely leverages a combination of technology and human oversight to manage its vast translation needs across multiple languages and markets.

Nestlé knows that speaking the right language goes way beyond translation. By taking the time to understand and adapt to local cultures, they bridge the gap and connect with consumers on a deeper level . This lets them craft messages that truly resonate with local preferences, which is a big reason for their success around the world.

How Professional Translation Services and Agencies Can Help

For a global giant like Nestlé, navigating the complexities of translation and localization can be a daunting task . However, partnering with a professional translation agency offers a multitude of benefits that can strengthen Nestlé’s global strategy.

Professional translation agencies bring a wealth of expertise to the table. They employ experienced linguists who are not only fluent in multiple languages but also possess deep knowledge of specific industries. For Nestlé, this means translators with a strong understanding of the food and beverage sector, ensuring accurate and relevant messaging that resonates with consumers across the globe .

Effective translation goes beyond simply converting words from one language to another. A professional translation agency understands the nuances of different cultures. They can adapt marketing materials, packaging, and other content to ensure they are culturally appropriate and avoid any potential misunderstandings. This cultural sensitivity is essential for building brand trust and fostering positive consumer relationships in each market Nestlé operates within.

Managing translation projects across multiple languages and regions can be a complex undertaking. Professional translation agencies offer multilingual project management expertise. They can handle everything from selecting the right translators for each project to ensuring deadlines are met and maintaining consistent brand messaging across all languages. This allows Nestlé to focus on its core business while confident that its translation needs are being handled efficiently and effectively.

While the initial investment in professional translation services may seem like a cost, it can ultimately be cost-effective for a company like Nestlé. Professional agencies can help Nestlé avoid costly mistakes arising from inaccurate or culturally insensitive translations. Additionally, by streamlining the translation process, agencies can help Nestlé save time and resources that can be better allocated elsewhere .

Nestle’s global strategy is a complex puzzle, and navigating the different languages and cultures can be a tricky piece to fit. That’s where professional translation services and agencies come in. They’re like secret weapons for Nestlé. With their language fluency, cultural know-how, and project management skills, these experts help Nestlé speak directly to consumers around the world . This builds trust and loyalty, which ultimately means success in the global market.

Analysis of Nestlé’s Global Strategy

Nestlé’s global strategy is a complex and multifaceted approach that has propelled the company to become a leader in the food and beverage industry . However, no strategy is without its strengths and weaknesses, and the ever-evolving global marketplace presents both opportunities and threats that Nestlé must navigate effectively.

• Global Brand Recognition:  Nestlé boasts a vast portfolio of well-known brands, from KitKat to Nescafé, that resonate with consumers worldwide. This strong brand recognition gives Nestlé a significant advantage in new markets.
• Focus on Innovation:  Nestlé’s commitment to research and development allows it to develop new products that cater to evolving consumer trends, such as the growing focus on health and wellness. This focus on innovation keeps Nestlé at the forefront of the industry.
• Diversified Portfolio:  Nestlé’s diverse product portfolio ensures the company is not reliant on any single market or product category. This diversification helps to mitigate risk and provides stability during economic downturns.
• Commitment to Sustainability:  Nestlé’s emphasis on sustainability aligns with growing consumer values and positions the company as a responsible leader within the industry.
• Large Size and Complexity:  Nestlé’s vast global presence can lead to bureaucratic inefficiencies and make it challenging to adapt quickly to changing market conditions.
• Dependence on Traditional Distribution Channels:  Nestlé’s reliance on traditional brick-and-mortar retail may limit its reach in a growing e-commerce market.
• Controversies and Public Perception:  Nestlé has faced criticism in the past regarding marketing practices and environmental impact. These controversies can damage brand reputation and consumer trust.
• Emerging Markets:  Developing economies present significant growth opportunities for Nestlé, particularly in the health and wellness sectors.
• E-commerce Growth:  The continued rise of e-commerce offers Nestlé a chance to expand its online presence and reach new customer segments.
• Plant-Based Food Trend:  The growing popularity of plant-based alternatives presents an opportunity for Nestlé to develop innovative new products that cater to this trend.
• Economic Volatility:  Economic downturns can impact consumer spending and hurt sales of non-essential goods like packaged foods and beverages.
• Competition:  Nestlé faces fierce competition from other food and beverage giants, as well as smaller, more nimble players in the market.
• Shifting Consumer Preferences:  Changes in consumer preferences towards healthier, more sustainable products require Nestlé to adapt its offerings to remain competitive.

Nestlé’s global strategy demonstrates a clear focus on innovation, brand building, and responsible practices. By capitalizing on its strengths, addressing its weaknesses, and staying ahead of market trends, Nestlé is well-positioned to maintain its dominance in the global food and beverage industry . However, the company must remain vigilant in the face of competition, economic volatility, and changing consumer preferences. Keeping a pulse on these external factors and adapting its strategy accordingly will be crucial for Nestlé’s continued success.

Nestlé’s global strategy is a powerful roadmap that has guided the company to its position as a leader in the food and beverage industry. Key aspects of this strategy include:

• A commitment to creating shared value, focusing on the well-being of both society and shareholders.
• A dedication to nutrition, health, and wellness, aligning with evolving consumer preferences.
• Continuous investment in research and development to deliver innovative new products.
• Emphasis on sustainability to reduce environmental impact and build brand trust.
• Effective utilization of translation and localization to connect with consumers across the globe.

Nestlé’s future outlook appears bright. The company’s focus on innovation and its commitment to addressing consumer trends, such as health and sustainability, position it well to capitalize on emerging market opportunities . Maintaining a focus on these core principles, while remaining adaptable to external challenges, will be essential for Nestlé to continue its reign as a global food and beverage leader.

Nestlé’s global strategy focuses on creating shared value, prioritizing both consumer health and environmental responsibility. They achieve this through continuous product development in line with health and wellness trends, a commitment to sustainable practices, and effective communication across cultures.

Nestlé creates shared value by investing in research and development to produce nutritious and delicious food options, while also implementing sustainable practices like reducing greenhouse gas emissions and using eco-friendly packaging.

Nestlé understands the importance of cultural sensitivities. They leverage translation and localization experts to adapt marketing messages, packaging, and even imagery to resonate with consumers in each market.

Nestlé’s strengths include strong brand recognition, a focus on innovation, a diversified product portfolio, and a commitment to sustainability.

Nestlé’s size can lead to bureaucratic hurdles, and their reliance on traditional distribution channels might limit their reach in the growing e-commerce market. Additionally, they face competition and need to adapt to changing consumer preferences towards healthier and more sustainable products.

Nestlé’s dedication to innovation, health, and sustainability positions them well for future success. By staying adaptable and capitalizing on opportunities in e-commerce and emerging markets, Nestlé has the potential to maintain its dominance in the global food and beverage industry.

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Nestlé’s CMO shares her strategy for accelerating digital transformation at scale

Digital transformation is a journey, not a destination. While every journey will be different, we can learn from leading brands as they advance their digital maturity. Here, Nestlé’s Global CMO, Aude Gandon, takes us through the company’s approach to global digital marketing.

Staying relevant in today’s dynamic environment requires embracing constant change. And as Nestlé’s Global Chief Marketing Officer, my mission is to accelerate our marketing digital transformation across the entire organization.

As a 156-year-old company with more than 2,000 brands — including icons like Kit Kat, Nespresso, and Purina — we believe that data and technology, along with our organization’s ability to adopt and activate quickly, are key to maintaining a competitive advantage.

Part of Nestlé’s success lies in how we’re able to attribute our digital investments to our top and bottom lines. We recently updated our investors on our digital transformation journey by explaining how we’re using data to reach and resonate with consumers at scale, and how that powers growth across our portfolio.

In particular, we’ve identified three key areas that are critical to our success and that we’ll continue to invest in: privacy-preserving fundamentals, valuable consumer connections, and ongoing experimentation. Here’s how we approach each one.

Privacy-preserving fundamentals

The first key to our success is a sharp focus on privacy-preserving fundamentals. A critical part of my role as global CMO is to help Nestlé navigate the changing advertising landscape , especially as third-party data collection phases out. By treating data protection and privacy as paramount, we've accelerated the use of privacy-preserving technologies across our organization, ensuring that our first-party strategy is future-proof. This means our brands can access high-quality data and continue to deliver personalized experiences online.

To drive our privacy strategy, we’ve developed and delivered a global advertising-technology roadmap across all our markets and brands. Doing so has helped us take advantage of privacy features, like consent mode within Google Analytics 4 (GA4), through which we can communicate users’ cookie- and app-identifier consent status to Google. Tags will then automatically adjust behavior and respect users’ choices. In turn, we’re able to safely improve our understanding of consumers across platforms and deliver richer experiences online.

Lastly, we recognize that staying up-to-date on new privacy capabilities requires us to invest in upskilling programs for our talented teams of brand builders around the world. By empowering our marketers to deeply understand the impact and value a technology unlocks, we can accelerate our transformation and put our company on the path to competitive advantage.

Valuable consumer connections

Our second key focus is on building and fostering valuable consumer connections. In particular, our goal is to reach 400 million consumers with our first-party database by 2025. Having direct access to our first-party data — and turning this data into actionable insight — is a critical competitive advantage with immediate value for our brands.

By moving toward a first-party, data-driven approach and leveraging Google’s privacy-preserving advertising and analytics tools, we’ve increased our ability to offer personalized solutions in real time, track ROI, and improve sales performance. This ultimately helps us make smarter investments, especially amid economic uncertainty, when it is more critical than ever to understand the value of media spend.

Our “Cloud-in-a-Box” program gives our brands scalable blueprints to unlock the value of machine learning and other predictive technology.

One powerful example of this is our food brand Maggi’s use of first-party data to inform dynamic ad creative and better connect with consumers in the Middle East during seasonal moments and other special occasions. By taking this approach, the Maggi team improved its return on ad spend by 25%.

Another example is how we leverage new audience capabilities to derive value from our first-party data. Solutions such as Google’s advanced look-alike modeling, currently available in beta, gives us more transparency and control when building audience segments by combining our first-party data with Google’s consumer intent signals. Already, this technology has improved our media efficiency and helped drive a 25% uplift in ad recall for one of our pet care brands in the U.K.

Ongoing experimentation

Our final key focus is on experimentation and fostering a culture of experimentation across our marketing teams. To do this, we lean heavily on cloud capabilities that give us the flexibility to try new technologies while strengthening consumer privacy and growing our first-party data. Our “Cloud-in-a-Box” program, for example, gives our brands scalable blueprints to unlock the value of machine learning and other predictive technology.

Here’s what this looks like in practice for our market-leading Nescafé coffee brand in Thailand. Using Cloud-in-a-Box, the Nescafé team routed large volumes of past campaign data to Google Cloud, then used machine learning to predict which creative messages paired with which audiences to deliver the best results on YouTube.

By taking this approach, Nescafé improved its cost per view by 17% and invested the money it saved to reach additional audiences, all while boosting ad recall 12%. Most importantly, the team saw up to 90% accuracy in the model’s predictions, when compared with outcomes from the actual campaign.

Achieving long-term goals

Building brands that consumers love remains our core marketing ambition. Our continued investment in digital transformation focuses us on understanding and using the power of data and technology to fuel growth potential for tomorrow.

By driving a consistent global marketing strategy across the organization, our team has been able to drive change at scale, embracing data and technology to build competitiveness. Our strategic priorities are helping us build resilience through uncertainty, positioning Nestlé to achieve long-term growth.

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Full Case Study: How Nestle’s Digital Marketing and Social Media Strategy Is Winning

By Aditya Shastri

In this Nestle ​ case study, we would go through one of the oldest and most famous brands of our time, Nestle. It is a Swizz multinational conglomerate operating worldwide for more than a century now.

In a country like India where there is so much competition in the industry already, Nestle has come a long way and has given its counterparts a run for their money.

This Nestle case study will examine how this mega-corporation in the Indian market has maintained a unique brand image for itself through innovative marketing campaigns and strategy that has created a strong brand connection among consumers even in this increasingly digitized world .

So let’s start by understanding a little more about Nestle’s company profile.

About Nestle India

Nestle SA is a Swiss multinational food and beverage conglomerate operating its business in India under the name of Nestle India.

It first arrived in India in 1956. Since then, from selling its first milk product in the 1960s to offering a wide range of quality products in the Indian market, Nestle has grown exponentially in India.

It offers products in beverages, breakfast cereals, chocolates and confectionery, dairy, and nutrition foods as well as vending and food services. Popular products such as Maggi, Kit Kat, Polo, Milkmaid, and Nescafe fall under Nestle India’s portfolio. The brand’s mantra of “Good Food, Good Life” transcends mere slogan status; it represents a dedicated pledge to offering nutritious and flavorful products that foster a healthier way of living.

Today, Nestle India has a significant presence in the FMCG sector and enjoys a healthy market share in the food and beverage industry. The company has established ambitious sustainability objectives, aiming to attain zero net greenhouse gas emissions by 2050 and implement 100% recyclable or reusable packaging by 2025.

The brand observed a 14.8% sales growth in the year 2022. This is a representation of the decade long growth that Nestle has gained.

Strong Product Mix of Nestle

2. gerber cereal, 4. ceregrow, 6. purina – for pets.

Being the largest food and beverage brand in the world by revenue, Nestle’s targeting and positioning strategy has played a key role in establishing itself all around the world. So let us understand how it has positioned its products to cater to the Indian audience.

Nestle’s Target Audience

Nestle India has positioned its wide range of product offerings in such a way that it covers audiences beginning from 2-year-olds to working-class professionals. Nestle target market includes almost every conceivable age group . Let’s check out Nestle’s Target Market based on age demographics.

Nescafe has been a hit among working professionals as Nestle has promised Nescafe to be the coffee that would keep them fresh throughout the day and who would not want to be fresh?

Parents have been tempted to feed their little ones with ‘Ceregrow’, a product from Nestle that contains cereals to keep young children healthy. It also has ever-popular products such as Maggi, KitKat, and Milkmaid which are targeted toward the general audience.

This is how Nestle has designed its targeting strategy in India and let’s now understand what it has done to market itself and its offerings in the coming section.

Nestle’s Digital Marketing Strategies

By now, you are aware of the fact that Nestle is the world’s largest food and beverage company by revenue. This might also come as very basic information for you.

But what if I told you that Nestle has always been one step ahead when it comes to its marketing policies and tactics? It has always worked on the most up-to-date marketing methods be it offline or digital marketing strategies , which matter the most in today’s day and age.

Let’s start with Nestle’s social media marketing strategy first.

Nestle’s Social Media Marketing Strategy

Nestle India is active on all three major social media platforms Instagram, Facebook, and Twitter. Here’s an overview of the same.

Now that you have an idea about Nestle’s presence on major social media platforms . Let’s now understand how and what it is doing on each social media platform.

Facebook and Instagram

Nestle India has designed its Facebook and Instagram profiles moreover the same. It shares posts related to what Nestle India is currently up to. It also announces its new launches, talks about its corporate social responsibility (CSR) measures, etc.

It maintains separate pages for its brands such as Maggi, Kit Kat, Nescafe, Koko Krunch, etc. which also have an insane amount of followers on both Instagram and Facebook.

Nestle’s Facebook Pages

To put it in a gist, Maggi has around 16 million followers. Nescafe has 36 million followers and Kit Kat has about 11 million followers on Facebook.

Nestle’s Instagram Pages

On Instagram, Maggi has around 105K followers. Nescafe has 156K followers and KitKat has about 1 million followers.

Having separate social media profiles for its various brands, helps them organize marketing campaigns effectively and thus resulting in a strong brand connection with its customers.

Nestle on Twitter

Nestle India has been maintaining its Twitter profile as a medium of communication between the company and its audience. It also solves queries related to its products by replying to every comment and mentions done by the general public on the platform.

Nestle’s Twitter handles

Just like Facebook and Instagram, Nestle on Twitter too has maintained separate profiles for its various brands. This helps them promote their products effectively.

Nestle on Youtube

Nestle India’s Youtube channel has about 95K subscribers. On this platform, they post all the advertisements of their brands. However, Nestle maintains the same strategy of maintaining a separate profile for its various brands.j

Nestle’s Youtube Channels

Now that you have a complete overview of Nestle’s social media presence . Let’s have a look at some of the campaigns rolled out by Nestle’s brands and along with a few creatives under their marketing campaigns which have helped them to maintain the attention of Indian consumers.

Marketing Campaigns of Nestle

Nestle marketing strategy is to roll out several campaigns that connect emotionally with the consumers. Here are the few marketing campaigns that have left a lasting impression on the Indian audience.

1. A Campaign for the Youth: Karne Se Hee Hona Hai

The Covid-19 pandemic has changed a lot of things for everyone, especially the millennials who were accustomed to doing certain things in a certain way.

This campaign by Nescafe was launched in July 2020 as India was preparing to come out of its series of lockdowns and begin life in the “new normal”.

Nescafe, in the above advertisement, encouraged the youth of the country to dream, act, and achieve their life goals.

And in the process, Nestle also highlighted to millennials that “It all starts with a Nescafe” . Thus promoting Nescafe and once again establishing that Nescafe plays a vital role in keeping the youth alive and fresh.

2. A Caring Campaign: Poora Poshan Poori Tasalli

Poora Poshan Poori Tasalli: This campaign was initiated by Nestle Ceregrow in 2019 targeting urban couples who had children between the age of 2-5 years.

In a country like India where parents pay a lot of attention to their child’s health and proper nourishment right away from the child’s birth.

Nestle very smartly portrayed how Indian mothers are worried about their child’s proper nourishment. The brand showcased its product and communicated that Ceregrow not only fulfils the child’s hunger but also provides the right kind of nutrients for the child’s immunity and overall development and nourishment.

You can watch this short 45-second video by Nestle Ceregrow which delivers the message beautifully and convinces urban parents why Ceregrow is a must-have for their growing toddler.

3. A Campaign for Maggi lovers: Meri Maggi

Meri Maggi has been one of the most successful mass campaigns led by any brand in India. The Meri Maggi campaign started with the motive to promote Maggi as a snack.

In this marketing strategy of Nestle , they also encouraged its consumers to personalize Maggi as per their wants and taste and share it on social media pages to get featured on Maggi’s official Facebook page.

Nestle started posting pictures of Maggi with different captions to make it relatable for different sets of audiences. Be it a Pyjama Party or a Break after Long Lectures in the college, Maggi made sure it relates to everyone and at the same time creates a strong brand engagement .

It did not stop there! Maggi then asked its followers to write back to them about their “Meri Maggi” and people started sharing their versions of Maggi and when they would have it. What’s your version of “Meri Maggi”?

Watch the Meri Maggi Ad campaign here,

This is how Nestle India strategically uses its social media as a tool for its marketing and campaign-related activities. Let us now examine how it is doing on its website in the next section of this case study of Nestle .

Nestle’s Website Overview

Nestle has a very strong website presence compared to its competitors. It has separate websites for its brands as well which helps Nestle to rank itself better on Google Search.

In today’s world where brands are working on spreading awareness via social media, Nestle has gone one step ahead and made its audience visit its websites by releasing various campaigns.

We would go through how Nestle has been doing on its official website by analyzing the Search Engine Optimization aspect of its official website to understand its strength in the internet space.

Search Engine Optimization (SEO)

Search Engine Optimization helps us rank better on the google search. It also showcases to us how well a website is in terms of customer experience.

UberSuggest tells us that the website is very well-optimized. Nestle has nearly 3,55,206 Organic Keywords. That’s something commendable. Not only that, but it also has more than 2,547,008 monthly organic visitors.

Let us understand further by going through its backlinks as it also has its own separate websites for its ever-popular brands.

Nestle has a Domain Score of 68 and has about 128,114 backlinks. This is huge when compared to any other FMCG brand in India. No other brand has such a high number of Backlinks as Nestle has.

Let now go through this unique campaign launched by Nestle to drive traffic to its website in the coming section.

Ask Nestle Campaign

In this campaign, Nestle India introduced a digital tool, NINA (Nestlé India Nutrition Assistant) on AskNestle.in which uses artificial intelligence to provide real-time nutritional information on the foods we intake. This helped Indian parents to create a nutritious custom meal plan for their children below 12 years of age.

AskNestle’s NINA was dubbed as India’s first artificially intelligent assistant that allows you to find nutritional information for children. So this is how Nestle India played its cards on digital fronts to drive organic website traffic growth and better overall engagement compared to its competitors.

Key Learnings from Nestle Marketing Strategy

1. diverse portfolio:.

In the fiercely competitive FMCG industry, thriving can be a daunting task. Nestle, however, has strategically utilized product diversification to not only overcome challenges but also achieve remarkable success. When faced with adversity, such as the ban on Maggi in India due to the detection of a harmful ingredient, Nestle responded by embarking on a comprehensive diversification initiative. They revamped the Maggi brand and expanded their product range, showcasing their adaptability and resilience. Offering an extensive array of products ranging from coffee to milkshakes, beverages to breakfast cereals, seasonings to infant foods, soups to chocolates, refrigerated foods to pet foods, Nestle demonstrates its versatility and ability to cater to diverse consumer needs.

2. Localization of Products:

Nestle customizes products for local markets adeptly. For example, in Japan, where tea is prevalent, Nestle launched coffee-flavored candies to cultivate a taste for coffee among children. This was followed by successful introductions of Nescafe and KitKat, leading to over 300 KitKat flavors in Japan today. Similarly, in India, Nestle tailors products such as Maggi Atta Noodles, garlic and onion-free Maggi noodles, and Maggi Special Masala to suit local preferences.

3. Co-Branding:

Nestle has effectively utilized co-branding strategies to bolster its product promotion. One notable instance is its collaboration with Starbucks to introduce a line of coffee products under the Nescafe brand.

4. Promoting Sustainability:

Nestle’s marketing strategy prioritizes sustainability and reducing its environmental impact. Nestle revealed its commitment to utilizing food-grade recycled plastics and investing over 700 million in sustainable coffee production for Nescafe. Additionally, the company has taken proactive measures to combat deforestation.These consistent efforts have positioned Nestle as a globally recognized sustainable brand.

With this our Nestle Case study comes to an end, Let’s now conclude the case study in the final section.

Note: Check out Free Digital Marketing Masterclass by IIDE to understand what digital marketing is all about.

Nestle India’s campaigns have always been short, sweet, and easy to relate to. The company has always relied on organic growth and does not run paid promotions on social media or Google or any other digital platforms.

So far, Nestle’s digital marketing campaigns have been very successful. However, it should continue to work towards unleashing its creativity to its full potential to remain connected with its customers.

If you like this case and want to learn more on the line of digital marketing, then do check our website for more information .

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• Nestlé Continuous Excellence (A): Beyond cost savings

The first case in a four-case series about Nestlé Continuous Excellence explores how in his first year as Nestlé’s Executive Vice President of Global Operations, José Lopez became convinced of the need for one approach to performance improvement, after seeing improvement initiatives at different company operations around the world. How would he get buy-in from the relevant influencers within the company, i.e. the technical heads who already had their own programs in place? Lopez planned a meeting at the Mirador hotel to do this.

The objective of this case is to encourage participants to think about (1) how to engage employees across a global organization and (2) how to convince key opinion leaders about the need for a single, common company-wide initiative, given the existence of multiple improvement initiatives around the world.

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• Nestlé Continuous Excellence (B): Launching NCE
• Nestlé Continuous Excellence (C): Operations and beyond
• Nestlé Continuous Excellence (D): Starting the journey beyond operations

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Pricing Strategy of Nestle Company: Case Study & Analysis (2024)

The moment you make a mistake in pricing, you're eating into your reputation or your profits.”

- Katharine Paine

In 2019, Nestle earned half of its worldwide sales in America. It had a cumulative revenue of about 92.6 billion Swiss Francs that year. How was Nestle able to generate that much revenue ? What is their pricing strategy? Let’s find out!

Case Study on Nestle

Nestle was founded in Switzerland by Heinrich Nestle in 1866. Nestle is one of the oldest multinational companies. From the early stages, Nestle wanted to take advantage of growth opportunities in different countries. In 1905, it merged with Anglo-Swiss condensed milk, broadening its product range to include infant formulas and condensed milk. Nestle currently has 447 factories, with operations in 189 countries.

In this case study, we will focus on Nestle's pricing strategies. Pricing is the most important element for maximising revenues. According to Harvard studies, if there is a 1% improvement in pricing, it leads to an 11% increase in profits (approx.). If the pricing structure is incorrect, the business loses profit with each transaction made. Therefore, correct pricing is critical.

Nestle is a multinational brand with a present net worth of about $270 billion. The success that the brand has is due to its pricing strategy. The revenue of Nestle is continuously growing, this depicts the successful identification and placement of its products in the market. Generally speaking, Nestle’s products are pricier in comparison to the products of the retailing brand.

Nestle’s pricing strategy is fairly distinctive in contrast with other brands. It merely hinges on recognition which is attributed to the apparent quality of the product. Based on this quality and the attitude of the customers, Nestle assesses the pricing strategy it wants to implement.

Nestle’s pricing strategies

Here are some of the strategies implemented by Nestle in order to achieve its targets and goals.

Nestle Price skimming

Price skimming is a pricing strategy in which a company charges a high price initially and lowers it over time.

Nestle uses price skimming for some of its products when it enters the market of a country. See Also Nestlé: How an idea to make the daily routine better turned into a billion-dollar company Nestle SWOT Analysis 2023 - SM Insight Nestlé Market segmentation, targeting, and positioning Which Marketing Strategy is Most Effective?

Nestle believed that the target consumers for Nescafe coffee were upper-middle-class consumers. Later, with the success of this approach and strategy, they lowered the prices and targeted the middle class .

Inexpensive pricing strategy

Amongst its wide range of brands, Nestle offers a fair price for quite a few of its brands and products. Pricing is based on market segmentation . Market segments generally involve a target audience.

Market segmentation is the practice to divide the target market into subgroups. It forms subsets depending on needs, psychographic, behavioral, and demographic criteria.

If Nestle is trying to target the mass market, then they implement an inexpensive pricing strategy instead of an expensive one.

This happened in the case of Nestle's Maggi noodles. It is considered affordable in comparison to other products of Nestle. However, if the price of Maggi is compared globally with other noodle brands, then it can be perceived as a little pricey.

Bundle price strategy

With time Nestle has understood that people do not usually do their groceries every day, instead, they prefer purchasing in bundles. Therefore, Nestle implemented the bundle packs approach.

Initially, Maggi was sold in a single pack but later on, Nestle offered a 16 pack which eventually increased the sales.

Penetration pricing strategy

Penetration pricing is a pricing strategy that an organisation uses to offer new products at lower prices in an attempt to attract more customers away from rivals.

When Nestle introduced a new flavor of Maggi instant noodles, they were sold at a low price of £2.25 to entice new customers. Nestle’s strategy was to lure more customers away from its rivals which offered alike flavors priced at £3.25. Nonetheless, when Nestle gained a greater customer base they increased the price to £3.

Psychological pricing strategy

Psychological pricing facilitates in creating a positive psychological influence on the consumer and attracts them to buy the product.

Nestle Aero bliss was sold for £8.99 instead of £9. This pricing strategy will have a positive psychological impact on the consumer and will encourage them to purchase the product. See Also Nestle Marketing Plan Analysis

Stock keeping units

Nestle does not want to lose any customers, so it has diverse pricing for every stock-keeping unit, allowing it to reach a bigger consumer base. From Maggi noodles to Cereals, Nestle has it all covered, whereby the company offers different sizes of packs.

Nestle’s cereal is slightly pricey in comparison to other brands. Hence, it started offering mini pouches for everyday consumption. This has made the pouches a lot cheaper than larger packs, hence allowing different segments of customers to buy Nestle’s products.

Discounts offered

Nestle offers discounts in various retail stores. Nestle products are often bundled and come with a 5% or 10% discount.

Coffee and creamer, as a bundle, is cheaper than buying the two items separately.

Competitive pricing strategy

Another general approach that Nestle follows is analyzing the pricing strategies of its rivals. Nestle has several brands and for every brand, it has separate departments that assess the pricing strategies of its rivals. Besides that, it examines the marketing style, sales, and innovation of rivals. The competitive pricing strategy assists in achieving Nestle's desired position as they acknowledge the preferences of the consumers.

Global pricing strategies of Nestle

Globally, Nestle attempts to ensure the pricing strategies that will assist it in achieving its financial objectives . These strategies typically involve the penetration and skimming strategy. The price of Nestle products automatically rises when they are exported to other regions. Alternatively, it also implements price skimming, as it sets a higher price at the start and then ultimately reduces the price based on the customer demand.

Over the years, Nestle has become one of the leading parent brands with successful divisions under its name. What has made Nestle successful with consumers is that it adapts to different pricing strategies according to the regions its selling and according to the product offered. It gives preference to the demands of its customers and tries to provide the best quality products at different price ranges so that all segments of consumers are able to afford its products, hence, increasing the sales and profits for the company.

Pricing Strategy of Nestle Company - Key takeaways

Nestle was founded in Switzerland by Heinrich Nestle in 1866.

Heinrich originally created Nestle for distributing milk food for newborns and found that it could be created from powdered milk, sugar, and other natural food.

Nestle is a multinational brand with a present net worth of about $270 billion. The success that the brand has is due to its pricing strategy.

Nestle’s pricing strategy is fairly distinctive in contrast with other brands.

Nestle uses various pricing strategies including price skimming, inexpensive and bundles pricing strategy, penetration pricing strategy, stock keeping units, psychological pricing strategy, discounts, and competitive pricing strategy.

Howandwhat, https://howandwhat.net/marketing-mix-nestle/

The Strategy Watch, https://www.thestrategywatch.com/pricing-strategy-nestle/

Price intelligently, https://www.priceintelligently.com/blog/bid/182007/6-must-read-pricing-strategy-quotes

StuDocu, https://www.studocu.com/my/document/tunku-abdul-rahman-university-college/pricing strategy/bbdt3193-pricing-strategy-for-the-company-nestle/18242524

Studymode, https://www.studymode.com/essays/Nestle-Pricing-Strategy-1058790.html

Iide, https://iide.co/case-studies/nestle-marketing-strategy/

Iide, https://iide.co/case-studies/marketing-mix-of-nestle/

What pricing strategies does Nestle use? ›

These strategies typically involve the penetration and skimming strategy . The price of Nestle products automatically rises when they are exported to other regions. Alternatively, it also implements price skimming, as it sets a higher price at the start and then ultimately reduces the price based on the customer demand.

Nestle Price skimming Nestle uses price skimming for some of its products when it enters the market of a country . Nestle believed that the target consumers for Nescafe coffee were upper- middle-class consumers. Later, with the success of this approach and strategy, they lowered the prices and targeted the middle class.

We create value guided by three strategic pillars: Growth through continuous innovation. Operational efficiency. Resource and capital allocation with discipline and clear priorities, including through acquisitions and divestitures .

Pricing strategy is the policy a firm adopts to determine what it will charge for its products and services . Strategic approaches fall broadly into the three categories of cost-based pricing, competition-based pricing, and value-based pricing.

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• 1. Nestlé: Global Strategy INTRODUCTION Nestlé is one of the oldest of all multinational businesses. The company was founded in Switzerland in 1866 by Heinrich Nestlé, who established Nestlé to distribute “milk food,” a type of infant food he had invented that was made from powdered milk, baked food, and sugar. From its very early days, the company looked to other countries for growth opportunities, establishing its first foreign offices in London in 1868. In 1905, the company merged with the Anglo Swiss Condensed Milk, thereby broadening the company's product line to include both condensed milk and infant formulas. Forced by Switzerland's small size to look outside its borders for growth opportunities, Nestlé established condensed milk and infant food processing plants in the United States and Great Britain in the late 19th century and in Australia, South America, Africa, and Asia in the first three decades of the 20th century. In 1929, Nestlé moved into the chocolate business when it acquired a Swiss chocolate maker. This was followed in 1938 by the development of Nestlé's most revolutionary product, Nescafe, the world's first soluble coffee drink. After World War II, Nestlé continued to expand into other areas of the food business, primarily through a series of acquisitions that included Maggi (1947), Cross & Blackwell (1960), Findus (1962), Libby's (1970), Stouffer's (1973), Carnation (1985), Rowntree (1988), and Perrier (1992). By the late 1990s, Nestlé had 500 factories in 76 countries and sold its products in a staggering 193 nations—almost every country in the world. In 1998, the company generated sales of close to SWF 72 billion ($51 billion), only 1 percent of which occurred in its home country. Similarly, only 3 percent of its 210,000 employees were located in Switzerland. Nestlé was the world's biggest maker of infant formula, powdered milk, chocolates, instant coffee, soups, and mineral waters. It was number two in ice cream, breakfast cereals, and pet food. Roughly 38 percent of its food sales were made in Europe, 32 percent in the Americas, and 20 percent in Africa and Asia. A GROWTH STRATEGY FOR THE 21ST CENTURY Despite its undisputed success, Nestlé realized by the early 1990s that it faced significant challenges in maintaining its growth rate. The large Western European and North American markets were sature. In several countries, population growth had stagnated and in some there had been a small decline in food consumption. The retail environment in many Western nations had become increasingly challenging, and the balance of power was shifting away from the large-scale manufacturers of branded foods and beverages and toward nationwide supermarket and discount chains. Increasingly, retailers found themselves in the unfamiliar position of playing off against each other manufacturers of branded foods, thus bargaining down prices. Particularly in Europe, this trend was enhanced by the successful introduction of private-label brands by several of Europe's leading supermarket chains. The results included increased price competition in several key segments of the food and beverage market, such as cereals, coffee, and soft drinks. At Nestlé, one response has been to look toward emerging markets in Eastern Europe, Asia, and Latin America for growth possibilities. The logic is simple and obvious—a combination of economic and population growth, when coupled with the widespread adoption of market- oriented economic policies by the governments of many developing nations, makes for attractive business opportunities. Many of these countries are still relatively poor, but their economies are growing rapidly. For example, if current economic growth forecasts occur, by 2010 there will be 700 million people in China and India that have income levels approaching those of Spain in the mid 1990s.As income levels rise, it is increasingly likely that consumers in these nations will start to substitute branded food products for basic foodstuffs, creating a large market opportunity for companies such as Nestlé. In general, the company's strategy has been to enter emerging markets early—before competitors—and build a substantial position by selling basic food items that appeal to the local population base, such as infant formula, condensed milk, noodles, and tofu. By narrowing its initial market focus to just a handful of strategic brands, Nestlé claims it can simplify life, reduce risk, and concentrate its marketing resources and managerial effort on a limited number of key niches. The goal is to build a commanding market position in each of these niches. By
• 2. pursuing such a strategy, Nestlé has taken as much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered milk in the Philippines, and 70 percent of the market for soups in Chile. As income levels rise, the company progressively moves out from these niches, introducing more upscale items, such as mineral water, chocolate, cookies and prepared foodstuffs. Although the company is known worldwide for several key brands, such as Nescafe, it uses local brands in many markets. The company owns 8,500 brands, but only 750 of them are registered in more than one country, and only 80 are registered in more than 10 countries. While the company will use the same “global brands” in multiple developed markets, in the developing world it focuses on trying to optimize ingredients and processing technology to local conditions and then using a brand name that resonates locally. Customization rather than globalization is the key to the company's strategy in emerging markets. EXECUTING THE STRATEGY Successful execution of the strategy for developing markets requires a degree of flexibility, an ability to adapt in often unforeseen ways to local conditions, and a long-term perspective that puts building a sustainable business before short-term profitability. In Nigeria, for example, a crumbling road system, aging trucks, and the danger of violence forced the company to rethink its traditional distribution methods. Instead of operating a central warehouse, as is its preference in most nations, the company built a network of small warehouses around the country. For safety reasons, trucks carrying Nestlé goods are allowed to travel only during the day and frequently under armed guard. Marketing also poses challenges in Nigeria. With little opportunity for typical Western-style advertising on television or billboards, the company hired local singers to go to towns and villages offering a mix of entertainment and product demonstrations. China provides another interesting example of local adaptation and a long-term focus. After 13 years of talks, Nestlé was formally invited into China in 1987 by the government of Heilongjiang province. Nestlé opened a plant to produce powdered milk and infant formula there in 1990, but quickly realized that the local rail and road infrastructure was inadequate and inhibited the collection of milk and delivery of finished products. Rather than make do with the local infrastructure, Nestlé embarked on an ambitious plan to establish its own distribution network, known as milk roads, between 27 villages in the region and factory collection points, called chilling centers. Farmers brought their milk—often on bicycles or carts—to the centers where it was weighed and analyzed. Unlike the government, Nestlé paid the farmers promptly. Suddenly the farmers had an incentive to produce milk, and many bought a second cow, increasing the cow population in the district by 3,000, to 9,000, in 18 months. Area managers then organized a delivery system that used dedicated vans to deliver the milk to Nestlé's factory. Although at first glance this might seem to be a very costly solution; Nestlé calculated that the long-term benefits would be substantial. Nestlé's strategy is similar to that undertaken by many European and American companies during the first waves of industrialization in those countries. Companies often had to invest in infrastructure that we now take for granted to get production off the ground. Once the infrastructure was in place in China, Nestlé's production took off. In 1990, 316 tons of powdered milk and infant formula were produced. By 1994, output exceeded 10,000 tons, and the company decided to triple capacity. Based on this experience, Nestlé decided to build another two powdered milk factories in China and was aiming to generate sales of $700 million by 2000. Nestlé is pursuing a similar long-term bet in the Middle East, an area in which most multinational food companies have little presence. Collectively, the Middle East accounts for only about 2 percent of Nestlé's worldwide sales, and the individual markets are very small. However, Nestlé's long-term strategy is based on the assumption that regional conflicts will subside and intraregional trade will expand as trade barriers between countries in the region come down. Once that happens, Nestlé's factories in the Middle East should be able to sell throughout the region, thereby realizing scale economies. In anticipation of this development, Nestlé has established a network of factories in five countries in hopes that each will someday supply the entire region with different products. The company currently makes ice cream in Dubai, soups and cereals in Saudi Arabia, yogurt and bouillon in Egypt, chocolate in Turkey, and ketchup and instant noodles in Syria. For the present, Nestlé can survive in these markets by using local materials and focusing on local demand. The Syrian factory, for example, relies on products that use tomatoes, a major local agricultural product. Syria also produces wheat, which is the main ingredient in instant noodles. Even if trade barriers don't come down soon, Nestlé has indicated it will remain committed to the region. By using local inputs and focusing
• 3. on local consumer needs, it has earned a good rate of return in the region, even though the individual markets are small. Despite its successes in places such as China and parts of the Middle East, not all of Nestlé's moves have worked out so well. Like several other Western companies, Nestlé has had its problems in Japan, where a failure to adapt its coffee brand to local conditions meant the loss of a significant market opportunity to another Western company, Coca-Cola. For years, Nestlé's instant coffee brand was the dominant coffee product in Japan. In the 1960s, cold canned coffee (which can be purchased from soda vending machines) started to gain a following in Japan. Nestlé dismissed the product as just a coffee-flavored drink, rather than the real thing, and declined to enter the market. Nestlé's local partner at the time, Kirin Beer, was so incensed at Nestlé's refusal to enter the canned coffee market that it broke off its relationship with the company. In contrast, Coca-Cola entered the market with Georgia, a product developed specifically for this segment of the Japanese market. By leveraging its existing distribution channel. Coca-Cola captured a 40 percent share of the $4 billion a year market for canned coffee in Japan. Nestlé, which failed to enter the market until the 1980s, has only a 4 percent share. While Nestlé has built businesses from the ground up in many emerging markets, such as Nigeria and China, in others it will purchase local companies if suitable candidates can be found. The company pursued such a strategy in Poland, which it entered in 1994 by purchasing Goplana, the country's second largest chocolate manufacturer. With the collapse of communism and the opening of the Polish market, income levels in Poland have started to rise and so has chocolate consumption. Once a scarce item, the market grew by 8 percent a year throughout the 1990s. To take advantage of this opportunity, Nestlé has pursued a strategy of evolution, rather than revolution. It has kept the top management of the company staffed with locals—as it does in most of its operations around the world—and carefully adjusted Goplana's product line to better match local opportunities. At the same time, it has pumped money into Goplana's marketing, which has enabled the unit to gain share from several other chocolate makers in the country. Still, competition in the market is intense. Eight companies, including several foreign-owned enterprises, such as the market leader, Wedel, which is owned by PepsiCo, are vying for market share, and this has depressed prices and profit margins, despite the healthy volume growth. MANAGEMENT STRUCTURE Nestlé is a decentralized organization. Responsibility for operating decisions is pushed down to local units, which typically enjoy a high degree of autonomy with regard to decisions involving pricing, distribution, marketing, human resources, and so on.At the same time, the company is organized into seven worldwide strategic business units (SBUs) that have responsibility for high-level strategic decisions and business development. For example, a strategic business unit focuses on coffee and beverages. Another one focuses on confectionery and ice cream. These SBUs engage in overall strategy development, including acquisitions and market entry strategy. In recent years, two-thirds of Nestlé's growth has come from acquisitions, so this is a critical function. Running in parallel to this structure is a regional organization that divides the world into five major geographical zones, such as Europe, North America, and Asia. The regional organizations assist in the overall strategy development process and are responsible for developing regional strategies (an example would be Nestlé's strategy in the Middle East, which was discussed earlier). Neither the SBU nor regional managers, however, get involved in local operating or strategic decisions on anything other than an exceptional basis. Although Nestlé makes intensive use of local managers, to knit its diverse worldwide operations together the company relies on its “expatriate army.” This consists of about 700 managers who spend the bulk of their careers on foreign assignments, moving from one country to the next. Selected primarily on the basis of their ability, drive, and willingness to live a quasi-nomadic lifestyle, these individuals often work in half a dozen nations, during their careers. Nestlé also uses management development programs as a strategic tool for creating an esprit de corps among managers.At Rive-Reine, the company's international training center in Switzerland, the company brings together managers from around the world, at different stages in their careers, for specially targeted development programs of two to three weeks duration. The objective of these programs is to give the managers a better understanding of Nestlé's culture and strategy and to give them access to the company's top management. The research and development operation has a special place within Nestlé, which is not surprising for a company that was established to commercialize innovative foodstuffs. The R&D function comprises 18 different groups that operate in 11 countries throughout the world. Nestlé spends approximately 1 percent of its annual sales revenue on R&D and has 3,100
• 4. employees dedicated to the function. Around 70 percent of the R&D budget is spent on development initiatives. These initiatives focus on developing products and processes that fulfill market needs, as identified by the SBUs, in concert with regional and local managers. For example, Nestlé instant noodle products were originally developed by the R&D group in response to the perceived needs of local operating companies through the Asian region. The company also has longer-term development projects that focus on developing new technological platforms, such as nonanimal protein sources or agricultural biotechnology products. Case Discussion Questions 1. Does it make sense for Nestlé to focus its growth efforts on emerging markets? Why? 2. What is the company's strategy with regard to business development in emerging markets? Does this strategy make sense? 3. From an organizational perspective, what is required for this strategy to work effectively? 4. How would you describe Nestlé's strategic posture at the corporate level; is it pursuing a global strategy, a multidomestic strategy, an international strategy, or a transnational strategy? 5. Does this overall strategic posture make sense given the markets and countries that Nestlé participates in? Why? 6. Is Nestlé's management structure and philosophy aligned with its overall strategic posture? Sources 1. Hall, W. “Strength of Brands Is Key to Success,” Financial Times, November 30, 1998, p. 2. 2. “How to Conquer China (and the World) with Instant Noodles,” The Economist, June 17, 1995. 3. Lorenz, C. “Sugar Daddy,” Financial Times, April 20, 1994, p. 19. 4. Michaels, D. “Chocolate Giants Worldwide Find Themselves Sweet on Polish Market,” The Wall Street Journal, December 12, 1997. 5. Nestlé. “Key Facts and History,” At http://www.nestle.com. 6. Rapoport, C. “Nestlé's Brand Building Machine,” Fortune, September 19, 1994, p. 147. 7. Steinmetz, G., and T. Parker-Rope, “All Over the Map.” The Wall Street Journal, September 26, 1996, p. R4. 8. Sullivan, M. “Nestlé Is Looking to Coffee Market in Russia for Sales,” The Wall Street Journal, August 7, 1998, p. B7A.

An Insight into Nestle Supply Chain Strategy

Are you curious about the secrets of Nestle’s supply chain strategy? Do you want to know how the world’s largest food and beverage company has successfully managed its supply chain for years? This article will provide an insight into Nestle’s supply chain strategy and how it has helped shape the company into a global powerhouse. Read on to find out more about Nestle’s unique supply chain strategy and how it has enabled them to remain competitive in the ever-changing business environment.

Table of Contents

Overview of Nestle Supply Chain Strategy

Nestle is one of the largest food and beverage companies in the world. The company has adopted a comprehensive supply chain strategy as part of its business strategy. This strategy covers all areas of its operations, from sourcing raw materials to delivering finished products to customers. Nestle’s supply chain strategy is focused on ensuring quality, efficiency, responsiveness, and sustainability.

Nestle’s supply chain strategy begins with sourcing raw materials and ingredients. The company works with suppliers to ensure that its products and components are of the highest quality and are produced sustainably. The company also ensures that its suppliers comply with international standards and regulations.

Once the raw materials have been sourced, Nestle’s supply chain strategy focuses on ensuring that the finished products are produced efficiently and delivered to customers on time. The company has invested in modern manufacturing technologies and integrated supply chain systems designed to optimize operations and reduce costs to achieve this.

Finally, the company’s supply chain strategy is focused on sustainability. Nestle uses renewable energy, sustainable production, and recycling to lessen its environmental effect. The company assures its suppliers follow ethical labor norms and socially responsible supply chains.

In the previous blogs, we looked into the supply chains of famous and leading companies, which you can read about each of them in the section below.

The Four Pillars of Nestle’s Supply Chain Strategy

Nestle’s supply chain strategy is based on four key pillars: quality, efficiency, responsiveness, and sustainability.

Quality is a key focus for Nestle, and the company works to ensure that the products and ingredients it sources from suppliers are of the highest quality. The company also works with its suppliers to ensure that they are compliant with international standards and regulations.

Nestle’s supply chain strategy focuses on ensuring its operations are efficient and cost-effective. The company has invested in modern manufacturing technologies and integrated supply chain systems to optimize operations and reduce costs.

Responsiveness

Nestle’s supply chain strategy is also focused on ensuring that its products are delivered to customers in a timely manner. The company works to ensure that its supply chain is agile and responsive, so that it can quickly and efficiently adapt to changing customer needs.

Sustainability

Nestle is committed to reducing its environmental impact and ensuring that its supply chain is socially responsible. The company works to reduce its environmental impact through the use of renewable energy sources, the adoption of sustainable production practices, and the implementation of waste reduction and recycling initiatives. It also works to ensure that its suppliers follow ethical labor practices.

Nestlé was one of the first companies to make a commitment to deforestation-free supply chains. At the time we knew it would be challenging, but we felt it was a moral imperative – for our environment, for the people, and for our planet at large. Magdi Batato Executive Vice President, Head of Operations, Nestlé

Advantages of Nestle Supply Chain Strategy

The advantages of Nestle’s supply chain strategy are numerous. By investing in modern manufacturing technologies and integrated supply chain systems, Nestle is able to optimize its operations and reduce costs. This helps to ensure that the company is able to remain competitive in the market.

Nestle’s focus on quality and sustainability also helps to ensure that the company is able to meet customer needs and expectations. The company’s commitment to ethical labor practices and environmental responsibility helps to build trust with customers, which in turn leads to loyalty and repeat business.

Finally, Nestle’s supply chain strategy helps to ensure that the company is able to deliver products to customers in a timely and efficient manner. This helps to reduce costs and ensure customer satisfaction.

Challenges of Nestle Supply Chain Strategy

Despite the advantages of Nestle’s supply chain strategy, there are still some challenges that the company needs to address. One of the biggest challenges is the need to ensure that the company’s supply chain is agile and responsive. This means that Nestle needs to be able to quickly and efficiently adapt to changing customer needs.

Furthermore, as the company expands its operations, it may become difficult to maintain the high standards of quality and sustainability that it has set for itself. This means that Nestle needs to be vigilant in monitoring its supply chain and ensuring that its suppliers are compliant with international standards and regulations.

Finally, as the company continues to expand its supply chain, it needs to ensure that its operations remain efficient and cost-effective. This can be a challenge, as Nestle needs to balance the need for quality and efficiency with the need to remain competitive in the market.

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What is Nestle’s Supply Chain Strategy?

Nestle’s Supply Chain Strategy focuses on creating a competitive advantage through innovation, cost efficiency, customer centricity, and sustainability. It strives to ensure that its supply chain is as efficient and responsive as possible, while still meeting the needs of its customers.

How does Nestle manage its global supply chain?

Nestle has a global network of suppliers, and works with them to ensure that its supply chain is as efficient and cost-effective as possible. It also works with its partners to ensure that its products meet the highest standards of quality.

What are Nestle’s key objectives for its Supply Chain Strategy?

Nestle’s key objectives for its Supply Chain Strategy include increasing efficiency, reducing costs, improving customer service, and driving sustainability.

What are Nestle’s strategies for staying competitive in the global market?

Nestle is committed to staying competitive in the global market by focusing on innovation, cost efficiency, customer centricity, and sustainability. It also works to ensure that its supply chain is as efficient and responsive as possible.

How does Nestle use technology to enhance its Supply Chain Strategy?

Nestle utilizes digital tools and technologies to streamline and optimize its supply chain processes. These include advanced analytics, predictive analytics, machine learning, artificial intelligence , Internet of Things (IoT) , and blockchain .

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Nestle Case Study: How Nestle’s Marketing Strategy Helped Them Grow as a Brand-2023

How many of you can answer this?

What is one common thing among Nescafe, Caregrow, KitKat, and Maggi?

Any guesses?

Yes, they are world-renowned brands, are familiar names in every household, and are products you must have consumed in your life at one point.

Anything other than these?

Yes. All these belong to one and only Nestle.

Be it in the fresh smell of hot coffee, a short break, or a bowl of tasty noodles- we cannot deny that all of us have enjoyed the awesomeness of Nestle’s products.

The brand has come a long way, crossing so many hurdles and achieving success, and it keeps growing.

Today, nestle is a brand that everyone is familiar with and uses in their day-to-day life.

Curious to know how?

In this Nestle case study, we are discussing everything about Nestle company, the marketing mix of Nestle, nestle competitors in India, marketing sales promotion techniques of nestle, and much more.

Nestle owns more than 2000 brands, from global stars to local ones.

How did Nestle achieve this level of success?

The brand has been in the market for more than 150 years, but many companies got this opportunity but failed. Nestle survived.

What is the secret of Nestle’s success?

This Nestle case study shows you a glimpse of nestle strategy and what digital marketing and social media strategies they followed that led to achieving this success.

So, let’s start by understanding a bit more about Nestle as a company.

Nestle had come a long way from when it entered the market by selling infant food in the 1860s with a motto to reduce child mortality rates.

Gradually, it became a renowned name in the wellness, healthy food, and pet care industry with its evergreen tagline, “Good Food, Good Life.”

Now, you must be thinking that how did Nestle reach this position? How can a company build a legacy which is so powerful that it has stood still since its birth?

The answer to this may lie in Nestle’s digital marketing and functional strategy.

Nestle Case study: Introduction of Nestle company

Nestle is a world-renowned manufacturer of packaged foods and beverages. It is the world’s largest food manufacturer operating in more than 186 countries and with over 2000 product brands.

The brand came to India in 1956. Since that time, from selling its first milk product in the 1960s to selling a wide variety of Nestle products in India, Nestle has grown exponentially in India.

With such exponential growth, Nestle’s umbrella keeps widening day by day. They are not only the largest food and beverage company in the world but also one of the best companies that have effortlessly collaborated with the online world and achieved immense success.

Gradually, Nestle India started making its presence felt in the FMCG sector, and now the brand enjoys a good market share in the food and beverage industry.

Being the most extensive food and beverage brand in terms of revenue, the pricing strategy of Nestle company, along with its targeting and positioning system, has played a vital role in reaching the position where it is currently.

Let us find out how it has served the Indian market with its products and services.

Nestle offers products in breakfast cereals, beverages, dairy, chocolates, nutritious foods like vending, and food services.

Popular food products like Kit Kat, Maggi, Milkmaid, Polo, and Nescafe come under Nestle’s products sold in India.

For more than 150 years, this iconic brand has been applying its expertise in Health, Nutrition, and Wellness to help its customers, pets, and families live a healthier and happier life.

However, they believe what is good today might not be suitable for tomorrow.

So, they keep exploring and focusing on pushing the boundaries to find more to experiment with foods, nutrition, and beverages.

Nestle unlocks the power of food to improve the quality of life for everyone, not just today but for generations to come.

The brand focuses on bringing more pleasure and enjoyment to the customers, how they can enable better health, and how they can make the best nutrition affordable to everyone.

Not just these, but the brand tries new ways to protect and improve natural resources.

History & Founder

Nestle was founded in 1905 by the union of the Anglo-Swiss Milk Company, set up in 1866 by brothers Charles and George Page and Farine Lactee Henri Nestle, founded by Henri Nestle in 1866.

Nestle originated in 1860 when two separate Swiss enterprises later created Nestle.

In the following decades, the two rival companies grew their businesses throughout the United States and Europe.

In 1866, George Page and Charles Page, brothers from Lee County, Illinois, USA, formed the Anglo-Swiss Condensed Milk Company in Cham, Switzerland. The company’s British operation started in 1873 at Chippenham, Wiltshire.

It was during the First World War when the organization grew significantly, and again during the Second World War, the company increased its offerings beyond its initial condensed milk and infant food products.

Nestle Case Study : Facts & Figures

Here are a few interesting numbers about Nestle that sets it apart from others.

• Nestlé is the world’s largest food and beverage company.
• The brand has 276000 employees
• Nestle has acquired 30 companies

Nestle Case Study: Nestle competitors in India

Nestle has many major customer brands like Carnation, Kit Kat, Nestle-water, and Stouffers, among others.

Thirty of its brands netted more than $1 billion in earnings in the year 2010, which makes the company a vital force in the worldwide food and beverage industry.

With around 42 % of its sales being in North America, Nestle is one of the most geographically distinct companies in the food and beverage industry. It places it in a position that helps it edge over its competitors.

Its brands are well established in a considerable market share in leading economies like U.S. and Europe.

Danone and Unilever are important competitors for Nestle. These two are giants in the food and beverage industry, like Nestle.

In 2010, Unilever posted around 26% growth in yearly profits because of its accelerated sales in the food and beverage industry, especially ice cream, frozen food, tea-based beverages, and cooking products.

On the other hand, Danone stated around a 38 percent increase because of its improved share prices. In addition, a rise in its yogurt sales also enhanced the growth in earnings.

However, nestle handles positioned itself in the market by adopting a new accounting method which aided a decline in its cost of sales.

The company could also incorporate discounts, allowances, and promotions for its retailers through sales profits rather than the marketing line.

Though its sale was lesser for a year, nestle pricing strategy helped them match its peers, which in turn, made it a famous manufacturer even though the competition was so high.

Being the world’s most popular food manufacturer, nestle has intense competition with its rival company, Unilever.

Unilever has around 1,49,000 employees and operates in 160 countries, with its headquarters in London for food, home, and personal care.

The company is trying hard to beat Nestle in terms of the quality of their product, which has made Unilever the second company in the Western European ready meals market with a market share of around 8.6%, i.e., 0.3 points behind the iconic Nestle.

Nestle’s Target Audience and Products for Each Segment

The unique thing about Nestle is that it offers a wide range of products that covers audiences of different ages, from 2-year-old to working professionals.

Here’s a breakdown of Nestle’s Target Audience and the products meant for them.

• Target Audience
• Working Professionals
• General Audiences
• Koko Krunch, Caregrow, Lactogrow
• Sunrise, Nescafe
• Maggi, KitKat, Milkmaid

Everyone, especially coffee lovers, will know how Nescafe is a big hit among working professionals.

Nestle guarantees that Nescafe is the only coffee that would keep professionals fresh throughout the day, and who does not want to feel fresh?

Regarding kids, parents blindly trust the product “Caregrow” by Nestle. The product consists of cereals to keep young kids healthy.

However, nestle has several other products like KitKat, Milkmaid, and Maggi for the general audience.

It is how Nestle has designed something for everyone in India. In the coming section, we will dig into how Nestle has advertised itself and its products in the digital world.

Nestle’s Digital Marketing Strategies

By now, you must have understood that Nestle is the world’s largest food and beverage company in terms of revenue. So, it might be basic information for many of you.

But what if we say Nestle always tries to be one step ahead regarding marketing strategies and policies?

It has always focused on the most updated marketing ways no matter, whether it is digital marketing strategies or offline strategies.

Nestle’s marketing strategies will teach you to build marketing strategies that work and get a positive response from customers.

Let us start with Nestle’s Digital Marketing Strategies that must follow if they want to succeed as a brand.

Partner with influential celebrities

Nescafe, a product of Nestle, collaborates with celebrities to put forward their message and create more noise around their brand.

A few years ago, they announced Bollywood actress Disha Patani as their brand ambassador.

Recently, they launched a campaign with famous content creators called “Karne Se Hi Hona Hai,” which means “Only doing will make it happen.”

They created this campaign during the Covid Pandemic to inspire people and encourage them to keep working hard towards their dreams no matter their situation.

Through this campaign, they targeted the youth of India and asked them to dream, act, and achieve success.

• Run campaigns that foster connections and bring customers together

An ordinary 37-year-old guy named Arnaud, with 1,2000 Facebook friends, was challenged by the company to catch up with his friends over a cup of coffee.

So, he filmed these meetings and turned them into a 42-minute online video documentary. During the sessions, Arnaud enjoyed a cup of Nescafe with his pals.

The documentary was a big hit on social media. It got almost 8 million views on Facebook, around 63,050 likes, 4,850 comments, and 5,550 shares. 

The Facebook Page of Nescafe saw an increase in the number of fans by 400%.

Fans were excited by the documentary and wanted to know how to turn their online friendships into real-life relationships.

As a reaction, it created the “le Defi Nescafe,” a Facebook campaign to allow winners to reinvent the same experience.

More than 26,000 people applied, around 19,000 liked it, and nearly 1,725 shared.

Instantly, Nescafe became an online sensation by marketing itself as an item that stimulates connections and friendships.

2. Localization of Products

Localization is adapting an organization’s products to the local market. Nestle has gone huge on localization in various markets where it now manages.

For example, consider Japan, where the organization’s primary foray was through coffee-flavored chocolates.

Japan is traditionally a tea-drinking country, and the company established these candies so that kids could also get to know the taste of coffee.

Later, it introduced Nescafe and KitKat, and what happened is history.

3. Content Marketing

Nestle has created many video content on every brand’s YouTube channels. The content ranges from informative “how-to” videos to cooking tips to better insights on using the right products.

For example, the “Meri Maggi” has more than 530 videos with more than 5,71,000 subscribers.

Though video content is an expanding channel in Nestle’s marketing strategy, it has recognized other avenues to share relevant information with its consumers.

4. Out-of-Home Advertising

Nestle’s brands, including Maggi, Milo, KitKat, and Nescafe, use different ways to grab customers’ attention.

Whether benches, hoardings, or banners, Nestle’s brands have made it to the limelight for their contextuality and creativity.

What are the advantages of using OOH ads? First, most people correctly receive these ads. They are worth sharing.

People can take photos online, send them to their friends or relatives, and even marketers discuss them.

In addition, with the help of OTT, they can reach many people at a low cost.

Also, Nestle’s marketing strategies are exceptional and generate some customers.

5. Co-branding

Have you ever heard about Android KitKat?

A few years back, Google and Nestle united and invented an Android KitKat operating system.

Nestle was facing a new scandal with their pet product and wanted to capitalize on the image of Google. This movie created a buzz and surpassed the crisis.

Lately, nestle signed another deal with Starbucks to kill two different birds at a time.

First, the brand entered the new product development stage-i.e., roasted beans- and improved its brand by discovering a wide range of Starbucks Nespresso Capsules.

Did you understand how co-branding helped Nestle?

Co-branding is great for stepping into a new market and widening your reach. This marketing benefits startup that wants to create brand awareness or launch a new item.

It would help if you found companies that complement your products and collaborated with them to run co-branding promotional ads.

Nestle – Challenges Faced

Undoubtedly, Maggi was the most popular instant noodles brand in India. The brand had established its presence in India’s food industry, but suddenly it became controversial.

State food regulators stated that Maggi contains Monosodium Glutamate and lead above the recommended limits, which were dangerous, especially for kids.  

When nestle encountered lab results, it said that they had a world-class quality control procedure and that their products were safe for consumption.

Ultimately, the National Food Regulator FSSAI ordered to ban on the selling of Maggi, including product recall.

Consequently, various state governments imposed a temporary ban on selling Maggi noodles in a few states. As a result, the future of the company suddenly started looking dark.

Another acquisition of Nestle by the critics was they accused that the brand discouraged mothers from breastfeeding.

They showed that their baby formula is much healthier than breastfeeding, although they didn’t have any proof to support this.

It resulted in a boycott of Maggi for the first time after its launch in 1977 in the United States and slowly spread to Europe.

Several reports have acknowledged the widespread use of child labor in Cocoa production, slavery, and child trafficking, throughout the Western African plantations on which Nestle and other important chocolate companies depend.

As per the 2010 documentary, The Dark Side of Chocolate, the kids working are usually 12 to 15 years old. Nestle faced criticism from The Fair Labour Association for not properly checking.

Different Campaigns by Nestle 

• Ask Nestle Campaign

In this campaign, Nestle India launched a digital tool, NINA, which stands for Nestle India Nutrition Assistant on AskNestle, which used Artificial Intelligence to offer real-time nutritional information on the foods we consume.

In addition, it assisted Indian parents in designing a nutritious customized meal plan for their kids below 12.

This campaign by Nestle was India’s first artificially intelligent assistant that permits one to find nutritional information for kids.

So, this is how Nestle India set its foot on digital fronts and started driving organic traffic and improved overall engagement compared to competitors.

2. #WeMissYouToo Maggi Campaign

Maggi suffered a massive loss after it got banned as Maggi contained a high amount of Monosodium Glutamate (MSG) and lead content- more than what is allowed.

It was hard for them to hope for a comeback, but Maggi did their best and experienced huge sales. As a result, the price and volume of Maggi are now much more significant than before.

How did they do so?

They did so through their different marketing campaigns. One among them was the #WeMissYouToo campaign.

In addition, they published a few videos showing how people are kissing Maggi and how their life was better with Maggi.

Videos showed how Maggi has been a staple food for many and how its absence had affected their lives. 

In campaigns, characters addressed Maggi as “yaar” or a “close friend” who is always there for them when in need. 

Therefore, they considered Maggi’s return as a huge celebration that brought people’s life to normalcy.

3. A Campaign for kids: Poora Poshan Poori Tasalli

Nestle Caregrow started this campaign in 2019. The campaign targeted couples living in the cities who had kids between the age of 2 to 5 years.

India is where parents are very concerned about their child’s health and nutrition right from birth. Nestle kept this in mind and decided to portray this care through its campaign. 

The brand portrayed how Indian mothers worry about their kids’ proper nourishment.

The brand came up with a new product, Caregrow, which controls a child’s hunger and offers all the essential nutrients for enhancing the child’s immunity and overall development.

4. Celebrate the Breakers- KitKat campaign

Across the world, people consume around 12 billion KitKat chocolates every year.

It is one of Nestle’s most famous chocolate products available in India. The company also released “KitKat Senses, a premium “slow-whipped” chocolate.

Nestle sought to influence Instagram to support its “Celebrate the Breakers” campaign by raising awareness and message association among enthusiastic 15- to 34-year-old Instagram followers.

Nestle came up with a new worldwide advertising campaign that takes a different approach altogether with a famous slogan, “Enjoy a break, enjoy a KitKat.”

“Celebrate the Breakers” was a new idea that identified the different forms of breaks that generally “breakers” take.

The animated movies showed KitKat chocolates are the best for enjoying a break in life.

Instagram was the appropriate platform for Nestle to showcase this idea graphically.

The brand posted a series of pictures with the hashtag “# mybreak over seven weeks ,” showing how people enjoy different types of breaks, like sleeping at their workplace, enjoying a party, or listening to their favorite music.

The images of KitKat match efficiently with its customers, as Instagram is a place where people share their daily moments and experiences.

Future Plans of Nestle

Nestle planned to invest Rs. 5,000 crores in India in the coming 3 ½ years, as per Mark Schneider, the company’s CEO.

The FMCG company, which has nearly 2,000 brands across the globe, believes that this initiative will help Nestle to improve its core business in India and enjoy new growth opportunities.

It marks the brand’s most significant investment in India since the year it started manufacturing.

Nestle is renowned in food, nutrition, health, and wellness.

Its competitive strategies mainly focus on overseas direct investment in ready-to-eat, dairy, and other food businesses.

Though there is rising competition, Nestle has remained on top for a long.

It maintains its dominance by balancing sales between high-risk and low-risk nations.

Over the years, Nestle has proven itself as a leader in the food and beverage industry with product innovation and innovative marketing strategies.

It creates campaigns that are memorable, relatable, and share-worthy.

As it is moving toward developing a solid presence in the future, digital marketing will play an essential role in the future growth of Nestle.

As Nestle continues to follow its values, mission, vision, and purpose, it will continue to grow. 

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Case Study of Nestle

In this article you will learn about Nestle case study which includes different types of Pricing Strategies that Nestle has used.

→ How did Nestle manage to make that much money?

Table of Contents

Nestle case study

Products offered by nestle.

Breakfast cereals, beverages, dairy, chocolates, nutritious foods and food services are all offered by Nestle.

They do, however, believe that what works now might not tomorrow.

The brand focuses on increasing consumer satisfaction and enjoyment, enabling better health, and making the greatest nutrition accessible to everyone.

Competitors of Nestle: A Case Study

The corporation is a major player in the global food and beverage market because thirty of its brands had earnings of more than $1 billion in 2010.

Nestle faces significant competition from Danone and Unilever. Like Nestle, these two are industry titans in the food and beverage sector.

Nestle Handles, on the other hand, positioned itself in the market by implementing a new accounting technique that helped to drive down its cost of sales.

Nestle, the most well-known food maker in the world, competes fiercely with Unilever.

Target Market of Nestle

The distinctive feature of Nestle is that it provides a broad selection of products that cater to audiences of all ages, from 2-year-olds to working adults.

→Working Professionals

Who doesn’t want to feel fresh?

→General Audiences

For the broader public, Nestle offers a number of additional items like KitKat, Milkmaid, and Maggi.

Nestle’s strategies for Digital Marketing

Regardless of whether they are offline or online, it has always concentrated on the most modern marketing techniques strategies.

Nestle: Partner with influential celebrities

Nescafe, a Nestle product, works with celebrities to promote their message and raise awareness of their brand.

Also, they developed this campaign during the Covid Pandemic to motivate individuals and inspire them to keep striving for their goals regardless of their circumstances.

Nestle: Product localization

Take Japan as an example, where the company’s main entry point was through chocolates infused with coffee.

Nestle: Co-branding

Do you know anything about Android KitKat?

Nestle has signed another agreement with Starbucks to accomplish two goals simultaneously.

Co-branding is a fantastic way to expand your reach and enter a new market. Startups looking to build their brand or introduce a new product can profit from this marketing.

Nestle: Content Marketing 

As an illustration, the “Meri Maggi” channel has more than 530 videos and 5,71,000 subscribers.

Nestle: Out-of-Home Advertising

Whether on benches, hoardings, or banners, Nestle’s brands have gained attention for their originality and contextual relevance.

Additionally, they can inexpensively reach a large number of individuals with the aid of OTT.

Nestle: Run marketing strategies that encourage connections and unite customers

He therefore recorded these meetings and produced a 42-minute web video documentary from them. Arnaud and his friends had a cup of Nescafe throughout the sessions.

The video generated excitement among viewers, who were eager to learn how to develop genuine relationships from their online friendships.

Nescafe quickly rose to fame online by positioning itself as a product that fosters relationships and friendships.

Nestle’s Social Media Marketing Strategy

Nestle’s social media presence.

Nestle’s Facebook

Nestle India has designed its Facebook. It shares posts related to what Nestle India is currently up to. It also announces its new launches, talks about its corporate social responsibility (CSR) measures, etc.

Nestle’s Instagram

Nestle’s twitter.

Nestle India has been maintaining its Twitter profile as a medium of communication between the company and its audience. It also solves queries related to its products by replying to every comment and mentions done by the general public on the platform.

Nestle’s YouTube

Nestle’s pricing strategy.

The moment you make a mistake in pricing, you’re eating into your reputation or your profits.” Katharine Paine.

Nestle’s revenue is steadily increasing, which shows that its products were successfully identified and positioned in the market. In general, Nestle’s products are more expensive than those of the retailing brand.

1- Price Skimming: Nestle

When using price skimming as a pricing strategy, a business sets its price high at first then gradually reduces it.

2-Inexpensive Pricing Strategy: Nestle

Nestle has a large number of brands and a variety of products, many of which are priced fairly. Market segmentation is used to determine pricing. Target audiences are typically included in market segmentation.

In the instance of Nestle’s Maggi noodles, this took place. Compared to other Nestle products, it is regarded as being reasonably priced. However, Maggi may appear to be a little expensive when compared to other noodle brands on a global scale. Bundle price strategy.

3- Penetration Pricing Strategy: Nestle

Offering new items at lower prices than competitors in an effort to attract more customers away from them is known as penetration pricing.

4- Psychological pricing strategy: Nestle

Instead of costing £9, Nestle Aero bliss was marketed for £8.99. This pricing strategy will influence the consumer’s psychology favorably and encourage them to purchase the product.

5- Stock Keeping Units: Nestle

As a result, it began providing tiny pouches for everyday use. This has made the pouches far less expensive than larger packs, enabling various customer segments to purchase Nestle’s products.

6- Discounts offered: Nestle

7- competitive pricing strategy: nestle.

Analyzing the pricing policies strategies of its competitors is another broad strategy that Nestle employs. Nestle has a number of brands, and each brand has a distinct department that analyses the pricing tactics of its competitors.

Global pricing strategies of Nestle

Nestle has developed into one of the top parent companies with prosperous branches operating under its umbrella. Nestle has been successful with consumers because it adapts to various price tactics based on the places it sells in and the products it offers.

Nestle Company’s pricing strategy- Key Insights

✔Nestle was initially developed by Heinrich for the purpose of supplying milk formula for infants. He discovered that it could be made from powdered milk, sugar, and other natural foods.

Upcoming plans of Nestle

Other articles, related posts, difference between competitive advantage and comparative advantage, types of competitive advantage | why it is important, marketing mix of walmart | marketing 7p’s, 11 price skimming examples, 16 examples of penetration pricing, advantages and disadvantages of price skimming: when to use price skimming, advantages and disadvantages of penetration pricing strategy | examples, apple: integrated marketing communication (imc), how to create a digital marketing strategy, difference between 4ps and 7ps of marketing.

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Nestle Global Strategy

Key learning’s from Nestle Case Is there anything like the “first mover advantage”? This phrase has been discussed zillion times across boardrooms all over the world, but nobody knows what the real answer is. There have been times when the person entering first was able to create sort of monopoly. Whereas, in other cases, companies entering second had a bigger advantage. I am not sure which one is better but one thing I am pretty confident about is that thorough knowledge and preparation can nullify the importance of this phrase.

As we saw in Nestle’s case that the same strategy paid well when the company had done thorough research and brainstorming before putting its foot forward.

We Will Write a Custom Case Study Specifically For You For Only $13.90/page!

Following are the key learning’s from this case- 1). Value and strategy for Contadina pasta: For entering the pasta market, company acquired Lambert’s to make a quick fire entry. It provided it with a product, which has been tested and tried over the years.

And then the different strategies of changed name – to make it sound authentic, distribution network – use of brokers for quick entry, bundling – for better quality control and Bases 2 – for thorough market survey helped the company beat its competitors in every way. The thorough analysis helped the company give better results than even its own expectations. 2).

Move into new uncharted category – Pizza : After the overwhelming success of pastas, company moved into an entirely new domain.

This frozen pizza segment was not tried by anybody before, not even by the smaller companies. But riding on the success of Pasta, management made some quick decisions to make sure that they again enter the market before Kraft. However, while making quick decisions, management didn’t go at length to research everything, which cost Nestle heavily. 3).

Improper positioning : The pizza was improperly positioned between the fresh pizza and frozen pizza market. Although it was not a lot better than frozen pizza but still it was highly priced .

On the other hand it cost the same as fresh pizza but was nowhere close in quality. This improper positioning hurt the products sale in a big way. Moreover, company’s strategy of milking the pasta brand loyalty didn’t worked well as that segment was not growing as close to what the company had projected. 4).

Un-methodical analysis: The quick fire decisions taken by management cost the company dearly. The management would have done a better job by thoroughly testing the segment for a longer period of time, than it did for pasta, which was already being accepted by the market.

The management came to realize this thing after the subsequent failures even after repeatedly trying all sorts of incentive and schemes to promote the product. In the final survey, which was launched to reason the failure, management realized that the assumption it has made initially were nowhere close to the actual results shown by the survey. This is an interesting and thorough case study describing the process that managements go through while making big decisions. And it gives concrete lessons on the pitfalls involved with the quick fire decision making.

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Nestlé, the baby food pioneer, wants to cash in on the world’s aging population problem

There’s no running away from the demographic change. A large chunk of the global population will hit their senior years in the coming decades, with the number of people aged 60 years and above doubling between 2020 and 2050.  

As alarming as population aging may be for economic growth and public finances, it presents an opportunity for Swiss food and nutrition conglomerate Nestlé. 

The company, whose founder invented the first form of infant formula, is now prioritizing products for the elderly.      

“The 50+ age group in most countries around the world is going to increase significantly over the next 10 to 20 years,” Nestlé’s CEO Mark Schneider told the Financial Times . “With that, and with the specific nutritional needs of that age group, there is an opportunity for us.” 

Advancements in science and technology, along with economic development taking billions out of poverty, are leading to longer life expectancy across most of the world. At the same time, many developed countries are suffering from staggeringly low birth rates—Italy’s births have dropped for 15 consecutive years now, while Finland’s aging population has been growing rapidly.  

To keep up with these parallel trends, Nestlé’s Health Science division wants to offer more supplements that cater to the different consumption patterns of older people, including the need to age healthily, for example by maintaining their weight or curbing blood sugar levels. 

Keeping up with the population

Shifting demographic trends have already begun to impact Nestlé’s business. For instance, the company closed one of its baby formula plants in China last year , citing plunging birth rates hurting demand for infant nutrition products.

Baby food is still big business for Nestlé—the company has a long and complex history in this segment, which accounted for roughly 15% of its profits in 2023—but such occurrences are only likely to become more common as the number of babies declines in more and more countries.

Nonetheless, Schneider said the company’s growing interest in the elderly does not come at the expense of its baby food arm.

“We’re not walking away from what we got started on, which is infant nutrition,” he said. 

“But we do see that in most economies around the world, the bigger demographic opportunity is among the middle-aged and elderly.”

Nestlé has been affected by emerging trends beyond demographics, such as the meteoric rise of weight-loss drugs. To help it ride the tide, Nestlé recently launched a new line of packed foods called Vital Pursuit , which it says can support the needs of those taking appetite-suppressing medication through portion control and better nutritional balance.

That’s a case of having to adapt to a suddenly different reality, which can be a dangerous time for established businesses. A gradually aging population, on the other hand—while alarming for economists—at least gives companies like Nestlé plenty of advance warning. No matter what happens in the next few years, you can be pretty sure the world isn’t getting any younger.

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Strategy Execution for Public Leadership

Implement a public leadership approach for long-term success..

Join Harvard Kennedy School faculty and former Pentagon Chief of Staff Eric Rosenbach to learn how to develop strategies for public leadership success.

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How do you execute a strategic initiative that has a long-lasting impact? Do you know how to effectively communicate your strategic approach, gathering input and support from key stakeholders? How will you anticipate and respond to scrutiny from shareholders, news media, and the public?

Leaders in government, non-profit, and education organizations face unique challenges when it comes to making strategic, business-oriented decisions. If not thoroughly planned and executed, these decisions have real consequences with high-stakes outcomes. What can we learn from world leaders and experts who have faced these monumental decisions? How can you build a high performing team to successfully execute strategic ideas?

In Strategy Execution for Public Leadership, former United States Pentagon Chief of Staff and Assistant Secretary of Defense for Homeland Defense and Global Security Eric Rosenbach will lead you through real-life public sector challenges, showing you how a purpose-driven strategy execution framework can lead to long-term adoption and success.

This government and nonprofit leadership training online course offers the opportunity to study decisions of key public leaders, like Former United States Secretary of Defense Ash Carter, so you can better understand how to develop strategies that not only align with your organizational goals, but also gain insight into the challenges and scrutiny that come along with making public decisions. Too often, public strategies fail because leaders don’t think about execution, which is made up of leadership and management tools, as well as a team who anticipates all scenarios prior to putting your plan into place. 

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Strategy is not one-size-fits-all. Implement a public leadership approach for long-term success.

The course will be delivered via  HBS Online’s course platform  and immerse learners in real-world examples from experts at industry-leading organizations. By the end of the course, participants will be able to:

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Education, neuroscience and AI: Japan collaboration enables pioneering research

Professor Kazuya Saito (IOE, UCL’s Faculty of Education & Society) used UCL-Tohoku University Strategic Partner Funds to develop unique research on language.

7 June 2024

Education and neuroscience are two distinctive research fields that have not historically had much crossover. However, this is an interdisciplinary field that holds great potential. While there are some outstanding neuroscience facilities in London, these resources are also in great demand, making it difficult for education researchers to progress their research in this area.

Professor Kazuya Saito was keen to explore some research ideas in education and neuroscience, and discovered that Tohoku University in Japan was interested in this field in the context of natural disasters. He subsequently applied for UCL-Tohoku University Strategic Partner Funds via the UCL Global Engagement Office. As a result of this, he and his colleague Dr Andrea Revesz, have been awarded funds for three projects with Tohoku University since 2020, which has also led to an additional collaboration with the Engineering Department at the University of Tokyo.

Bringing language and neuroscience into disaster research

“A priority for Tohoku University is disaster research,” Kazuya explained. “After all, they have regular earthquakes there, and people are not surprised when there’s an earthquake anymore. My expertise is in second languages, and there are immigrants in Japan who need to deal with disaster situations in their second language. I had a research idea that could help with this.”

Kazuya and Andrea set up a series of exploratory pilot studies into the cognitive demands on those using their second language (known as L2). The study explored how L2 tasks affect brain activity while speaking and writing in crisis settings. To do this, they worked extensively with neuroscientists at Tohoku University, and were able to use functional MRI (fMRI) equipment in the lab. The team is still working on the findings, which will include recommendations for support that can be provided to L2 speakers in Japan. “Using neuroscience techniques to improve the effectiveness of language interventions is a really new field,” Kazuya said. “We will be able to provide a lot of support to immigrants who are second language users in Japan.”

Exploring the intersection of language and neuroscience in adults led the researchers to think about support they could provide to children too. There is an increase in multilingual children generally in society, and especially in the UK and Japan. These children are typically exposed to their heritage language at home from birth, but predominantly use another language at school. This dynamic risks the loss of their heritage language and cultural identity. Furthermore, it can also create a lag in literacy in both heritage and dominant languages, compared to their monolingual peers. There is a lack of awareness of this issue and limited resources to help multilingual children develop both their heritage and dominant languages. 

Kazuya received further UCL-Tohoku University Strategic Partner Funds to explore this topic. In particular, he wanted to understand how they could use AI based training, matched to the profiles of specific users, to train the cognitive and linguistic abilities in multilingual children. “For this project, I was able to connect neuroscience researchers at Tohoku University with engineering researchers at the University of Tokyo,” Kazuya said. “Education, neuroscience and AI – these are three completely independent topics. We usually don't talk to each other as academics in these fields. This is highly interdisciplinary research that holds great potential. And I’ve found myself to be a kind of ambassador for promoting collaborations like this between different universities and departments in Japan.”

Following on from this work, Kazuya has recently been awarded a new research funding from the British Council to further reinforce and expand this collaboration with Tohoku University and the University of Tokyo over the next 24 months. So far, the team has successfully established neuroscience assessments using fMRI and electroencephalogram (EEG), to find out how individuals learn multiple languages differently. Moving forward, they will work with the computer science team to further explore how AI can tailor language training activities while taking into account such neurocognitive individual differences. They will start with adults and eventually work with children too.

Recognition for leading work

While this research is ongoing, Kazuya’s work is getting noticed in many circles. Earlier this year, he was announced as a recipient of the 20th Japan Society for the Promotion of Science (JSPS) Prize. Kazuya met Fumihito, the Crown Prince of Japan at the award ceremony, where he was recognised as a future leader of scientific research in Japan.

Professor Kazuya Saito receiving the 20th Japan Society for the Promotion of Science (JSPS) Prize at the Japan Research Council

Foreground (left to right): Professor Kazuya Saito, Tsuyoshi Sugino, President of the Japan Society for the Promotion of Science Background (left to right): Crown Prince Akishino (Fumihito), Crown Princess Kiko “To be nominated for this national award, you actually have to be based in Japan,” Kazuya explained. “And if you're not based in Japan, someone has to nominate you. Professor Motoaki Sugiura, who leads the neuroscience lab at Tohoku University, nominated me. I was speechless, and very proud. Without the UCL-Tohoku University Strategic Partner Funds, none of this would have happened.”

Some of the team’s work has been presented at notable conferences too, including the World BOSAI conference, the American Association of Applied Linguistics, and the European Second Language Research conference. 

On a personal level, this opportunity to collaborate with researchers in Japan has been an important way for Kazuya to reconnect with his home country. “There are many international researchers at UCL. We have left our country, and after a while, we feel very far away from our homeland,” Kazuya said. “These funds helped me professionally, but also to personally re-establish my identity. It just shows how opportunities like this can bring many benefits to international scholars at UCL.”

• UCL academic recognised as future leader of Japanese research
• Professor Kazuya Saito’s research profile  
• UCL in East Asia
• IOE, UCL's Faculty of Education and Society
• Find out more about funding opportunities offered by UCL Global Engagement

Featured image:

Group photo of Kazuya and Tohoku University researchers at a workshop titled 'The neurocognitive foundations of successful second language acquisition' at UCL

The state of AI in 2023: Generative AI’s breakout year

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The latest annual McKinsey Global Survey  on the current state of AI confirms the explosive growth of generative AI (gen AI) tools . Less than a year after many of these tools debuted, one-third of our survey respondents say their organizations are using gen AI regularly in at least one business function. Amid recent advances, AI has risen from a topic relegated to tech employees to a focus of company leaders: nearly one-quarter of surveyed C-suite executives say they are personally using gen AI tools for work, and more than one-quarter of respondents from companies using AI say gen AI is already on their boards’ agendas. What’s more, 40 percent of respondents say their organizations will increase their investment in AI overall because of advances in gen AI. The findings show that these are still early days for managing gen AI–related risks, with less than half of respondents saying their organizations are mitigating even the risk they consider most relevant: inaccuracy.

The organizations that have already embedded AI capabilities have been the first to explore gen AI’s potential, and those seeing the most value from more traditional AI capabilities—a group we call AI high performers—are already outpacing others in their adoption of gen AI tools. 1 We define AI high performers as organizations that, according to respondents, attribute at least 20 percent of their EBIT to AI adoption.

The expected business disruption from gen AI is significant, and respondents predict meaningful changes to their workforces. They anticipate workforce cuts in certain areas and large reskilling efforts to address shifting talent needs. Yet while the use of gen AI might spur the adoption of other AI tools, we see few meaningful increases in organizations’ adoption of these technologies. The percent of organizations adopting any AI tools has held steady since 2022, and adoption remains concentrated within a small number of business functions.

Table of Contents

• It’s early days still, but use of gen AI is already widespread
• Leading companies are already ahead with gen AI
• AI-related talent needs shift, and AI’s workforce effects are expected to be substantial
• With all eyes on gen AI, AI adoption and impact remain steady

About the research

1. it’s early days still, but use of gen ai is already widespread.

The findings from the survey—which was in the field in mid-April 2023—show that, despite gen AI’s nascent public availability, experimentation with the tools  is already relatively common, and respondents expect the new capabilities to transform their industries. Gen AI has captured interest across the business population: individuals across regions, industries, and seniority levels are using gen AI for work and outside of work. Seventy-nine percent of all respondents say they’ve had at least some exposure to gen AI, either for work or outside of work, and 22 percent say they are regularly using it in their own work. While reported use is quite similar across seniority levels, it is highest among respondents working in the technology sector and those in North America.

Organizations, too, are now commonly using gen AI. One-third of all respondents say their organizations are already regularly using generative AI in at least one function—meaning that 60 percent of organizations with reported AI adoption are using gen AI. What’s more, 40 percent of those reporting AI adoption at their organizations say their companies expect to invest more in AI overall thanks to generative AI, and 28 percent say generative AI use is already on their board’s agenda. The most commonly reported business functions using these newer tools are the same as those in which AI use is most common overall: marketing and sales, product and service development, and service operations, such as customer care and back-office support. This suggests that organizations are pursuing these new tools where the most value is. In our previous research , these three areas, along with software engineering, showed the potential to deliver about 75 percent of the total annual value from generative AI use cases.

In these early days, expectations for gen AI’s impact are high : three-quarters of all respondents expect gen AI to cause significant or disruptive change in the nature of their industry’s competition in the next three years. Survey respondents working in the technology and financial-services industries are the most likely to expect disruptive change from gen AI. Our previous research shows  that, while all industries are indeed likely to see some degree of disruption, the level of impact is likely to vary. 2 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023. Industries relying most heavily on knowledge work are likely to see more disruption—and potentially reap more value. While our estimates suggest that tech companies, unsurprisingly, are poised to see the highest impact from gen AI—adding value equivalent to as much as 9 percent of global industry revenue—knowledge-based industries such as banking (up to 5 percent), pharmaceuticals and medical products (also up to 5 percent), and education (up to 4 percent) could experience significant effects as well. By contrast, manufacturing-based industries, such as aerospace, automotives, and advanced electronics, could experience less disruptive effects. This stands in contrast to the impact of previous technology waves that affected manufacturing the most and is due to gen AI’s strengths in language-based activities, as opposed to those requiring physical labor.

Responses show many organizations not yet addressing potential risks from gen AI

According to the survey, few companies seem fully prepared for the widespread use of gen AI—or the business risks these tools may bring. Just 21 percent of respondents reporting AI adoption say their organizations have established policies governing employees’ use of gen AI technologies in their work. And when we asked specifically about the risks of adopting gen AI, few respondents say their companies are mitigating the most commonly cited risk with gen AI: inaccuracy. Respondents cite inaccuracy more frequently than both cybersecurity and regulatory compliance, which were the most common risks from AI overall in previous surveys. Just 32 percent say they’re mitigating inaccuracy, a smaller percentage than the 38 percent who say they mitigate cybersecurity risks. Interestingly, this figure is significantly lower than the percentage of respondents who reported mitigating AI-related cybersecurity last year (51 percent). Overall, much as we’ve seen in previous years, most respondents say their organizations are not addressing AI-related risks.

2. Leading companies are already ahead with gen AI

The survey results show that AI high performers—that is, organizations where respondents say at least 20 percent of EBIT in 2022 was attributable to AI use—are going all in on artificial intelligence, both with gen AI and more traditional AI capabilities. These organizations that achieve significant value from AI are already using gen AI in more business functions than other organizations do, especially in product and service development and risk and supply chain management. When looking at all AI capabilities—including more traditional machine learning capabilities, robotic process automation, and chatbots—AI high performers also are much more likely than others to use AI in product and service development, for uses such as product-development-cycle optimization, adding new features to existing products, and creating new AI-based products. These organizations also are using AI more often than other organizations in risk modeling and for uses within HR such as performance management and organization design and workforce deployment optimization.

AI high performers are much more likely than others to use AI in product and service development.

Another difference from their peers: high performers’ gen AI efforts are less oriented toward cost reduction, which is a top priority at other organizations. Respondents from AI high performers are twice as likely as others to say their organizations’ top objective for gen AI is to create entirely new businesses or sources of revenue—and they’re most likely to cite the increase in the value of existing offerings through new AI-based features.

As we’ve seen in previous years , these high-performing organizations invest much more than others in AI: respondents from AI high performers are more than five times more likely than others to say they spend more than 20 percent of their digital budgets on AI. They also use AI capabilities more broadly throughout the organization. Respondents from high performers are much more likely than others to say that their organizations have adopted AI in four or more business functions and that they have embedded a higher number of AI capabilities. For example, respondents from high performers more often report embedding knowledge graphs in at least one product or business function process, in addition to gen AI and related natural-language capabilities.

While AI high performers are not immune to the challenges of capturing value from AI, the results suggest that the difficulties they face reflect their relative AI maturity, while others struggle with the more foundational, strategic elements of AI adoption. Respondents at AI high performers most often point to models and tools, such as monitoring model performance in production and retraining models as needed over time, as their top challenge. By comparison, other respondents cite strategy issues, such as setting a clearly defined AI vision that is linked with business value or finding sufficient resources.

The findings offer further evidence that even high performers haven’t mastered best practices regarding AI adoption, such as machine-learning-operations (MLOps) approaches, though they are much more likely than others to do so. For example, just 35 percent of respondents at AI high performers report that where possible, their organizations assemble existing components, rather than reinvent them, but that’s a much larger share than the 19 percent of respondents from other organizations who report that practice.

Many specialized MLOps technologies and practices  may be needed to adopt some of the more transformative uses cases that gen AI applications can deliver—and do so as safely as possible. Live-model operations is one such area, where monitoring systems and setting up instant alerts to enable rapid issue resolution can keep gen AI systems in check. High performers stand out in this respect but have room to grow: one-quarter of respondents from these organizations say their entire system is monitored and equipped with instant alerts, compared with just 12 percent of other respondents.

3. AI-related talent needs shift, and AI’s workforce effects are expected to be substantial

Our latest survey results show changes in the roles that organizations are filling to support their AI ambitions. In the past year, organizations using AI most often hired data engineers, machine learning engineers, and Al data scientists—all roles that respondents commonly reported hiring in the previous survey. But a much smaller share of respondents report hiring AI-related-software engineers—the most-hired role last year—than in the previous survey (28 percent in the latest survey, down from 39 percent). Roles in prompt engineering have recently emerged, as the need for that skill set rises alongside gen AI adoption, with 7 percent of respondents whose organizations have adopted AI reporting those hires in the past year.

The findings suggest that hiring for AI-related roles remains a challenge but has become somewhat easier over the past year, which could reflect the spate of layoffs at technology companies from late 2022 through the first half of 2023. Smaller shares of respondents than in the previous survey report difficulty hiring for roles such as AI data scientists, data engineers, and data-visualization specialists, though responses suggest that hiring machine learning engineers and AI product owners remains as much of a challenge as in the previous year.

Looking ahead to the next three years, respondents predict that the adoption of AI will reshape many roles in the workforce. Generally, they expect more employees to be reskilled than to be separated. Nearly four in ten respondents reporting AI adoption expect more than 20 percent of their companies’ workforces will be reskilled, whereas 8 percent of respondents say the size of their workforces will decrease by more than 20 percent.

Looking specifically at gen AI’s predicted impact, service operations is the only function in which most respondents expect to see a decrease in workforce size at their organizations. This finding generally aligns with what our recent research  suggests: while the emergence of gen AI increased our estimate of the percentage of worker activities that could be automated (60 to 70 percent, up from 50 percent), this doesn’t necessarily translate into the automation of an entire role.

AI high performers are expected to conduct much higher levels of reskilling than other companies are. Respondents at these organizations are over three times more likely than others to say their organizations will reskill more than 30 percent of their workforces over the next three years as a result of AI adoption.

4. With all eyes on gen AI, AI adoption and impact remain steady

While the use of gen AI tools is spreading rapidly, the survey data doesn’t show that these newer tools are propelling organizations’ overall AI adoption. The share of organizations that have adopted AI overall remains steady, at least for the moment, with 55 percent of respondents reporting that their organizations have adopted AI. Less than a third of respondents continue to say that their organizations have adopted AI in more than one business function, suggesting that AI use remains limited in scope. Product and service development and service operations continue to be the two business functions in which respondents most often report AI adoption, as was true in the previous four surveys. And overall, just 23 percent of respondents say at least 5 percent of their organizations’ EBIT last year was attributable to their use of AI—essentially flat with the previous survey—suggesting there is much more room to capture value.

Organizations continue to see returns in the business areas in which they are using AI, and they plan to increase investment in the years ahead. We see a majority of respondents reporting AI-related revenue increases within each business function using AI. And looking ahead, more than two-thirds expect their organizations to increase their AI investment over the next three years.

The online survey was in the field April 11 to 21, 2023, and garnered responses from 1,684 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of those respondents, 913 said their organizations had adopted AI in at least one function and were asked questions about their organizations’ AI use. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.

The survey content and analysis were developed by Michael Chui , a partner at the McKinsey Global Institute and a partner in McKinsey’s Bay Area office, where Lareina Yee is a senior partner; Bryce Hall , an associate partner in the Washington, DC, office; and senior partners Alex Singla and Alexander Sukharevsky , global leaders of QuantumBlack, AI by McKinsey, based in the Chicago and London offices, respectively.

They wish to thank Shivani Gupta, Abhisek Jena, Begum Ortaoglu, Barr Seitz, and Li Zhang for their contributions to this work.

This article was edited by Heather Hanselman, an editor in the Atlanta office.

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