“The Nestle Story”

- brought to you by: October 16, group 2

ANKIT,
KRITIKA,
MEGHA
PRAVEEN,
SHIVANI
& VIKASH
FMCG Products
BREAKING DOWN FMCG
• Nearly everyone in the developed and developing world uses fast-moving consumer goods
(FMCC) every day.
• They are the small-scale consumer purchases we make at the produce stand, grocery store,
supermarket and warehouse outlet.
• FMCG have short shelf lives, so, while the profit margin on individual FMCG sales is low, the
volume of sales makes up for it. The market for $3.99 orange juice is a lot larger than the market
for $399 juicing machines.
• The products often cater to 3 very distinct aspects - necessity, comfort & luxury. They meet the
demands of the entire cross section of population. Price and income elasticity of demand varies
across products and consumers.
• Individual items are of small value (small SKU's) although all FMCG products put together account
for a significant part of the consumer's budget.
• The consumer spends little time on the purchase decision. Brand loyalties or recommendations of
reliable retailer/ dealer drive purchase decisions.
• Limited inventory of these products (many of which are perishable) are kept by consumer and
prefers to purchase them frequently, as and when required.
• Brand switching is often induced by heavy advertisement, recommendation of the retailer or
word of mouth.
MAJOR GLOBAL PLAYERS
MAJOR PLAYERS IN INDIA
FMCG GROWTH FORECAST:INDIA
FMCG GROWTH RATE %

22

20

17

13 13
12
11

2009 2010 2011 2012 2013 2014 2015 2016

FMCG GROWTH RATE %
 Introduction to the brand
• Nestle is the largest food company in the world, marketing over 8500 brands and 30000 products.
It employs 283,000 people in 480 factories situated in 86 countries and its products are on sale
everywhere.

• It is a multinational nutritional and health-related consumer goods company headquartered in

Vevey, Switzerland. It is the largest food company in the world measured by revenues.

• Paul Bulcke is the current CEO.

• Nestlé is very much decentralized in its operations and most markets are given considerable
autonomy in its operations.

• Nestle has been a partner in India’s growth for over nine decades now (precisely since 1912)and
has built a very special relationship of trust and commitment with the people of India.
• Nestle's products include baby food, bottled water, breakfast cereals, coffee, confectionery, dairy
products, ice cream, pet foods and snacks.
Product Portfolio
 Nestle: Some
Figures

• Nestle is a leading Nutrition,

Health and Wellness
Maggi
Company.and has presence in
approximately 116 countries.
• It was founded in 1866, and
has completed 150 years in
2016.
• Nestle has a huge customer
base.
• On the right is the Profit After
Tax figures for Nestle from
2011-2015 (in crores INR)
 Nestle and
Competition Profit Figures
12000

• On the right is the PAT for 10000

9,765.63 9,765.63
10,061.22

years 2012-2016 8,990.62 8,990.62

• Figures are in INR crores 8000
• Figures for 2016 are only till
Jun-16. 6000
• ITC is way ahead in the
competition. 4315.26 4082.37
4000 3796.67 3867.49

2691.4
2000
1067.93 1117.13 1184.69
577.22 563.27
545.17 701.86
336.59 429.09 439.3
0
2012 2013 2014 2015 2016
HUL Nestle Marico ITC
 Nestle Achievements
• It is one of the top 5 FMCG company in
India.
• Has reported profit for continuous 5 years in
spite of Maggi controversy.
• Received 27th World Environment Center
(WEC) Gold Medal award for its
commitment to environmental
sustainability.
• In spite of the Maggi controversy, Nestle
bounced back and has managed to establish
the brand value again.
• They pulled back 37000 tons of Maggi from
the market, destroyed them and delivered
the product widely, making it available in
almost every corner and nook of the country
Maggi Debacle
• Maggi accounted for roughly a quarter of the company’s $1.6 billion in revenue in the country.
• In 2014, Maggi was named one of India’s five most trusted brands.
• March 2014: Sanjay Singh, Food Safety Commissioner (UP), sent 4 packets of Maggi to laboratory to check the content of MSG.
Tests were positive. Maggi packet does not mention MSG on the packet.
• Nestle denied and appealed the finding. Another sample was sent for tests to another govt lab.
• 5 June 2015: FSSAI pronounced Maggi “unsafe and hazardous for human consumption,” a designation supported by 30
government lab tests showing Nestlé’s noodles contained excess amounts of not only MSG but also lead.
• Nestle decides to recall Maggi.
• Nestlé lost at least $277 million in missed sales. Another $70 million was spent to execute one of the largest food recalls in history.
Add the damage to its brand value—which one consultancy pegged at $200 million—and the total price tag for the debacle could
easily be more than half a billion dollars.
• Nestle remained quiet. To outsiders, too, Nestlé appeared paralyzed—or worse, guilty. Many Indians took the company’s silence as
a sign of wrongdoing.
• 4 Mistakes:
 It was blinded by pride.
 It failed to think two steps ahead
 It overlooked context
 It communicated but didn’t engage
Nestle Stock Performance
Nestle Sales
Comeback…….
• It publicized its recall efforts. And it invited journalists to tour its Quality Assurance
Centre in Moga.
• The relaunch of Maggi was scheduled for Monday, Nov. 9—five months and four days
after the government ban, and an auspicious day in India known as Dhanteras. The first
day of Diwali, the Hindu festival of lights, it carries associations of well-being and
prosperity.
• Nestlé launched a #WeMissYouToo campaign on YouTube—a series of minute-long spots
starring handsome bachelors who are forlorn without their instant noodles. To court
mothers, it got real moms to give video testimonials about why they still trusted Maggi.
• Nestlé delivered the product as widely as possible on day one.
• The no added msg label on the packages had been replaced by a new logo reading “Our
commitment to goodness you can always trust.” Narayanan gave dozens of interviews
repeating some version of a simple message: “Maggi is safe, was safe, and always will be
safe.”
 Mission : “Good Food, Good Life”

Vision : “To create trustworthy products, systems and services”

• Make Choices: Put resources behind the ideas, products and categories that help us on our journey to
recognised Nutrition, Health and Wellness leadership, and to deliver sustained financial performance.

• Grasp Opportunities: See the opportunity in change and trends, and translate them into concrete
business opportunities.

• Value What Consumers Value: All that we do should create value for consumers and drive out waste.

• Engage with Stakeholders: We want to be trusted by all consumers and stakeholders as a genuine and
responsible member of the community.
• Embrace Digital: Deepen the connection with consumers through the growing e-commerce channel and
through real-time listening, engagement and dialogue.

• Win through People and Teams: We need the right people with the right capabilities and effective
leadership at all levels to engage, empower and enable everyone to give their best.
 Economic Logic

Media relations

Vehicles

Investors, vendors
& Consultants 9 elements of
Competitor Analysis
Corporate &
Marketing
Strategy
Customer
Staging Satisfaction

Arenas
Differentiators
 The corporate, marketing and
differentiation strategy
• Dominate chocolates and dairy products segment in the market.
• Addition of new products to the portfolio, mainly chocolates and dairy products
• Getting back to double-digit growth both in terms of top line and volumes.
• Restoring stability at Nestlé India
• Zero tolerance for noncompliance
• Prioritising consumer service engagement, digital media engagement, media responsiveness, friendly face of Nestlé
• Innovation and renovation of Nestle product line
• Largest R&D network of any food company in the world, with 32 centres and over 5000 people directly involved in
R&D
• It has a deep consumer understanding that helps it to create and deliver products, systems and services that its
competitors cannot
• Nestle uses the product differentiation strategy rather than cost leadership to establish product quality and
reputation
 • Product and brand portfolio
• Exorbitant R&D capabilities
• Excellent geographic presence and distribution
channels
• Brand repute and value and customer loyalty

• Less retail margins

S W • Inability to provide
• Being a huge company, time is consistent quality in food
lost through decision periods products
• Trend towards healthy eating • Distribution cost as
• Rising food prices compared to competitors
• Local players like Patanjali T O is high
gaining market share • Brand recognition is less
• Threat of substitute products • Small and neglected PR
department

• Product line addition like ayurvedic products, healthy

snacks etc
• Exploring the ecom potential for sales
• Must go towards Globalisation
• Product Innovation
Efforts for Rural Development and Environment Sustainability

• Nestle claims to have added value to farmers by processing agricultural

products in a sustainable manner.
• They recycle and reduce waste
• They also work on different rural development programs, eg providing
drinking water in villages, collaborating directly with farmer etc.
• They emphasis on minimizing their footprint on environmental
resources.
References
• http://www.investopedia.com/terms/f/fastmoving-consumer-goods-fmcg.asp

• http://www.mbaskool.com/

• http://www.itcportal.com/

• http://www.smartbizbd.com/

• https://www.linkedin.com/pulse/20140612114640-32995382-the-3-biggest-marketing-trends-in-fmcg

• http://top10companiesinindia.co.in/top-10-fmcg-companies-in-india/

• http://www.nielsen.com/in/en/insights/reports/2014/whats-in-store-for-indias-fmcg-market.html

• http://economictimes.indiatimes.com/marico-ltd/profitandlose/companyid-5886.cms

• http://economictimes.indiatimes.com/industry/cons-products/tobacco/itc-reports-10-per-cent-jump-in-net-profit-at-rs-2385-crore/articleshow/53329637.cms

• http://economictimes.indiatimes.com/nestle-india-ltd/profitandlose/companyid-13330.cms

• http://www.nestle.com/

• http://previews.123rf.com/images/experimental/experimental1110/experimental111000002/10816481-showing-achievement-of-business-success-via-team-constructing-on-puzzle-Stock-Vector.jpg

• http://www.arlenward.com/wordpress/wp-content/uploads/2014/05/achievement-race.jpg

• http://indianexpress.com/article/explained/explained-noodles-in-the-soup/

• http://fortune.com/nestle-maggi-noodle-crisis/

• http://www.nestle.com/aboutus/strategy

• http://indianexpress.com/article/business/business-others/nestles-maggi-makes-a-comeback-without-major-brand-ambassadors/

• https://www.reference.com/business-finance/vision-statement-nestle-c89d9920c17f024a#

• http://www.forbesindia.com/article/boardroom/nestl%C3%A9-2.0-back-to-basics-with-a-new-strategy/43225/1

• http://money.rediff.com/companies/Nestle-India-Ltd/11120007/profit-and-loss