A Study on Nestle Brand Building, Distribution and IMC Strategies
Submitted by
Meer Ahsan Habib ID No : 113081017 United International University
Submitted to
Mr Mushtaque Ahmed Visiting Faculty of Brand of Brand Management United International University
16 April 2010 United International University
Table of Contents of Contents 1. Executive Summery 2. Historical Background
2 3
3. Nestlé’s Business Principal
4
4. Core Value of Nestlé of Nestlé ‐ Creation of Shared of Shared Value
5
5. Major Acquisitions and Sales
7
6. Products
8
6.1 Cereals
8
6.2 Coffee
8
6.3 Water
8
6.4 Other drinks
8
6.5 Chilled
9
6.6 Ice cream
9
6.7 Infant foods
9
6.8 Performance nutrition
9
6.9 Healthcare nutrition
9
6.10 Seasonings
10
6.11 Frozen foods
10
6.12 Chocolate, confectionery and baked goods
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7. SWOT Analysis
11
7.1 Strengths
11
7.2 Weakness
11
7.3 Opportunity
12
7.4 Threats
12
8. Building the Brand Nestle
14
8.1 Evolution of Nestle of Nestle Logo
14
8.2 The First Mover
15
8.3 Acquisition
15
8.4 Relying on Existing Distribution Channel
16
9. Marketing tactics ‐ the marketing mix
17
9.1 Product strategy
17
9.2 Pricing strategy
18
9.3 Promotional strategy
18
9.4 Distribution strategy
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10. Distribution Structure Of Nestle Of Nestle India 10.1 Selection of distributors of distributors
20 20
10.1.1 Capital investment
20
10.1.2 Relevant experiences
20
10.1.3 Infrastructure
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11. Performance
22
11.1 Group sales, profitability and financial position
22
11.2 Sales and EBIT margin by operating segment
22
11.3 Future Plan
23
12. Conclusion
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13. References
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A Study on Nestle Brand Building, Distribution and IMC Strategies
Submitted by
Meer Ahsan Habib ID No : 113081017 United International University
Submitted to
Mr Mushtaque Ahmed Visiting Faculty of Brand of Brand Management United International University
16 April 2010 United International University
1. Executive Summery The paper examines historical background of Nestlé, its target market, about the value it is creating. Then it makes a focus on its marketing Mix strategies i.e. product, price, place and promotion. A distribution network has also been drawn to give an idea of the distribution network which ensures that consumers get Nestlé’s products at ease. IMC options that are crucial for letting the consumers know that the product is readily available to be consumed by them. In this regard a few print and commercial ads have been analysed.
2
2. Historical Background Nestlé is the world's leading Nutrition, Health and Wellness Company. The Company is committed to increasing the nutritional value of its products while improving the taste. Since Henri Nestlé developed the first milk food for infants in 1867, and saved the life of a of a neighbor’s child, the Nestlé Company has aimed to build a business as the world's leading nutrition, health and wellness company based on sound human values and principles. In August of that of that year, Charles A. and George Page, brothers from Lee County, IL in the United States, established the Anglo‐Swiss Condensed Milk Company in Cham Cham.. In September, in Vevey, Henri Nestlé developed a milk ‐based baby food and soon began marketing it. In the succeeding decades both enterprises aggressively expanded their businesses throughout Europe and the United States. (Henri Nestlé retired in 1875, but the company, under new ownership, retained his name as Farine Lactée Henri Nestlé.) In 1877 Anglo‐ Swiss added milk ‐based baby foods to its products, and in the following year the Nestlé company added condensed milk, so that the firms became direct and fierce rivals.
In 1905, however, the companies merged to become the Nestlé and Anglo‐Swiss Condensed Milk Company, retaining that name until 1947, when the name Nestlé Alimentana SA was taken as a result of the of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company, Alimentana SA of Kempttal, of Kempttal, Switzerland. Maggi was a major manufacturer of soup of soup mixes and related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company was operating factories in the United States, United Kingdom, Germany and Spain. World War I created new demand for dairy products in the form of government of government contracts; by the end of the of the war, Nestlé's production had more than doubled.
After the war, government contracts dried up and consumers switched back to fresh milk. However, Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the company's second most important activity.
Nestlé felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to US$6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the company's newest product, Nescafé, which was a staple drink of the of the US military. Nestlé's production and sales rose in the wartime economy.
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3. Nestlé’s Business Principal Nestlé is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices:
•
Nestlé's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners.
•
Nestlé does not favor short‐term profit at the expense of successful long‐term business development.
•
Nestlé recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust, and that without its consumers the Company would not exist.
•
Nestlé believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization.
•
Nestlé is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the of the right people and ongoing training and development are crucial.
•
Nestlé continues to maintain its commitment to follow and respect all applicable local laws in each of its of its markets.
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4. Core Value of Nestlé of Nestlé ‐ Creating Shared Value As a basis for responsible operations and business success over the long term, Nestlé believes it must manage its operations in a manner to comply with the highest standards of business of business practice and environmental sustainability.
This involves compliance with national laws and relevant conventions, as well as Nestlé’s own regulations, which often go beyond our legal obligations. These are laid out in our Nestlé Corporate Business Principles and related policy documents, and their application is verified through Nestlé’s CARE programme and Nestlé’s internal Corporate Group Auditors.
Beyond that, how we do business is based on sustainability ‐ ensuring that Nestlé’s activities preserve the environment for future generations. In line with the Brundtland Commission's definition, sustainable development to Nestlé means "development that meets the needs of the present without compromising the ability of future of future generations to meet their own needs".
However, we believe that to build a profitable business for Nestlé’s shareholders, we must go beyond compliance and sustainability to a third level: creating long‐term value for both society and for Nestlé’s shareholders. This is what Nestle means by Creating Shared Value:
•
using Nestlé’s core business strategies and operations to create value for shareholders;
•
serving consumers and the public by offering them nutritious products that are both enjoyable and contribute to their health and well‐being;
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•
seeking to improve the economic and social conditions for people and communities across Nestlé’s entire value chain – chain – for farmers who supply Nestlé raw ingredients, for communities where Nestlé’s factories are located, for suppliers who work with Nestlé and for Nestlé’s trade partners.
The primary way we create value is by offering consumers tasty, nutritious products that contribute to their health and well‐being, but we also create value for people and society across the entire business value chain – for farmers who supply Nestlé raw ingredients, for communities where Nestlé’s factories are located, for suppliers who work with Nestlé, and for Nestlé’s trade partners.
The diagram below illustrates how Nestlé’s actions, driven by Creating Shared Value, create value for the business (in economic, innovation, social and environmental terms) that is shared with the societies where Nestle is present. It was developed as a conceptual framework to measure a company’s overall net impact on its stakeholder groups by the Centre for International Business at Leeds University Business School
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5. Major Acquisitions and Sales The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998), and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in June, Nestlé merged its U.S. ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America, the creator of Hot Pockets. In the same time frame, Nestlé came close to purchasing the iconic American company Hershey's, though the deal fell through. Another recent purchase includes the Jenny Craig weight loss program for US$600 million. In December 2005 Nestlé bought the Greek company Delta Ice Cream for €240 million. In January 2006 it took full ownership of Dreyer's, thus becoming the world's biggest ice cream maker with a 17.5% market share. In November 2006, Nestlé purchased the Medical Nutrition division of Novartis of Novartis Pharmaceutical for $2.5B, also acquiring in 2007 the milk flavoring product known as Ovaltine. In April 2007 Nestlé bought baby food manufacturer Gerber for $5.5 billion. In December 2007 Nestlé entered in a strategic partnership with a Belgian chocolate maker Pierre Marcolini. Nestlé agreed to sell its controlling stake in Alcon to Novartis on 4 January 2010. The sale forms part of a of a broader US $39.3 billion offer by Novartis to fully acquire the world’s largest eye‐care company
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6. Products Nestlé has a wide range of branded of branded products across a number of markets of markets including coffee (Nescafé), bottled water, other beverages, chocolate, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food. 6.1 Cereals
•
Cinnamon Grahams
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Cookie Crisp
•
Koko Krunch
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Milo Cereals
•
Nestlé Corn Flakes
6.2 Coffee
•
Buondi (Portugal)
•
Christina (Portugal)
•
Dolca (Argentina Argentina))
•
Ecco (Peru Peru,, Chile Chile))
•
Nescafé
•
Nespresso
6.3 Water
•
Aberfoyle
•
Deer Park
•
Ice Mountain
•
Henniez
•
Perrier
6.4 Other drinks
•
Milo
•
Chocolate D'Onofrio (Peru Peru))
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•
Cocoa D'Onofrio (Peru Peru))
•
Nescao (Argentina Argentina,, Peru Peru))
•
Nescau (Brazil Brazil))
6.5 Chilled
•
Chamyto (Brazil, Mexico, Chile, Philippines)
•
Chiquitín (Mexico, Chile)
•
Club (Mexico)
•
Hirz (Switzerland)
•
La Laitière (France,Belgium)
6.6 Ice cream
•
Mövenpick
•
Mivvi
•
Nestlé
•
Nestlé Drumstick ‐ The Original Sundae Cone
•
Nestlé Princessa
6.7 Infant foods
•
Cérélac
•
Farinha Láctea (Brazil)
•
FM 85
•
Gerber
•
Nestlé
6.8 Performance nutrition
•
Musashi
•
Neston
•
Nesvita
•
PowerBar
•
Pria
6.9 Healthcare nutrition
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•
Boost
•
Carnation Instant Breakfast
•
Nutren
•
Peptamen
•
Glytrol
6.10 Seasonings
•
Buitoni
•
Maggi
•
Carpathia
•
CHEF
•
Thomy
•
Winiary
6.11 Frozen foods
•
Maggi (INDIA)
•
Stouffer’s
•
Lean Cuisine
•
Buitoni
•
Hot Pockets
•
Lean Pockets
6.12 Chocolate, confectionery and baked goods
•
Kit Kat
•
Matchmakers
•
Nestlé Alpine White
•
Nestlé with Almonds
•
Polo
•
Toffee Crisp
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7. SWOT Analysis 7.1 Strengths
•
Global food producer, located in over 100 countries. Consistently one of of the the world's largest producers of of food food products, with sales in the USA in 2008 of of $10 $10 billion; sales and earnings in 2008 were better than expected, even in a downturned economy. Global sales in 2008 topped $101 billion.
•
Repeatedly ranked as the world's largest bottled water company and have set up facilities to operate water resources in a responsible manner. In 2008, Nestlé was named one of "America's Most Admired Food Companies" in Fortune magazine for the twelfth consecutive year.
•
Nestlé provides quality brands and products and line extensions that are well‐known, top‐ selling brands including:
•
Professional brands sold to restaurants, colleges, hotels, and food professionals including Jenny Craig meals, Impact liquid meals for trauma patients, liquid meals for diabetics, and OptiFast weight loss products.
•
Successful due in part to their unquestionable ability to keep major brands consistently in the forefront of consumer's minds (and in their shopping carts) by renovating existing product lines, keeping major brands from slipping into saturation/decline and having superior access to distribution channels.
7.2 Weakness •
Their LC‐1 division was not as successful as they thought it would be in France. In the late 1980s, Dannon entered the market with a health‐based yogurt, and become the top selling brand of yogurt; of yogurt; Nestlé's 1994 launch was behind the product life cycle curve in an already mature market and could not compete against a strong, established brand.
•
Growth in their organic food sales division was flat in 2008, even though the industry grew 8.9%.
•
Since 2004 the breakfast cereal industry has been under fire from the FDA and the American Medical Association, both of which say that false claims of "heart healthy" and "lower cholesterol" need to be removed from packaging and advertising. They have also been forced to reduce the amount of sugar in their products, as parent's advocates groups claimed they were contributing to the diabetes epidemic among American children.
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•
General Mills is an experienced, established brand and are the market leader in the USA, however, they have been lacking in innovation, have not cashed in on the booming health food craze and have been behind in creating new, niche products, especially in their yogurt division, where Yoplait is the only brand making a profit.
•
In 2008, although their products did not carry the recalled pistachios, several of their ice cream brands, Dryer's, Edy's and Haagen‐Dazs, were still plagued with bad PR and loss of sales.
7.3 Opportunity
•
In today's health conscious societies, they can introduce more health‐based products, and because they are a market leader, they would likely be more successful.
•
Provide allergen free food items, such as gluten free and peanut free.
•
They launched a new premium line of higher cacao content chocolates dubbed Nestlé Treasures Gold, in order to cash in on the "recession economy" in which consumers cut back on luxury goods, but regularly indulge in candy and chocolate. Americans want luxury chocolates, and high‐end chocolate is immune to the recession (so far), because it is an inexpensive indulgence.
•
Opened Nestlé Café's in major cities to feature Nestlé products.
7.4 Threats •
Any contamination of the of the food supply, especially e‐coli. Their Toll House brand cookie dough was recalled in March of 2009 of 2009 because of e of e‐coli. Outbreaks were linked to 28 states and the product had to be recalled globally. Nestlé has yet to find out how this happened, and is still investigating.
•
They were affected by the pet food recall in 2007, in which 95 different brands of dog and cat food were recalled due to contamination with rat poison. Also in 2007, FDA learned that certain pet foods were sickening and killing cats and dogs. FDA found contaminants in vegetable proteins imported into the United States from China and used as ingredients in pet food.
•
Raw chocolate ingredient prices are soaring; dairy costs alone rose 50% in 2008, this cuts heavily into their profit margins and often gets passed on to consumers, by shrinking the packaging in a way that is almost unnoticeable‐therefore the consumer is paying the same prices for less product.
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•
They have major competitors, like Hershey's, Cadbury‐Schweppes (owned by Pepsi), Lindt and Ghirardelli, Kellogg's, Post, Starbucks, Beech‐Nut, Quaker, Kraft Foods, Dannon, Del‐ Monte, Iams, Earth's Best, Heinz, Frito‐Lay (owned by Pepsi).
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8. Building the Brand Nestle Nestle is a house of Brands which provides about 8500 brand names, but only 750 of them are registered in more than one country and only 80 are registered in more than ten countries. This is due to the fact that Nestle’s strategy is based on a broad range of local of local brand names which are not entitled as “Nestle”.
Company: Nestle SA Parent Brand Name: Nestlé Slogan : Good Food, Good Life Brand Mark and Logo
8.1 Evolution of Nestle of Nestle Logo
The Nestlé logo was launched by Henri Nestlé in 1868 on the basis of the meaning of his of his name in German, i.e. little nest, and of his of his family emblem
Henri obtained
a
15-year
French
patent
for
his
logo in
1868.
After he retired, it was registered in Vevey in 1875 by the new owners of his company
In 1938, the traditional nest design was combined with the "Nestlé" name to form what is called the combined mark
In 1966 the design was simplified.
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In 1988, the worm in the mother bird's beak was removed and the fledglings became two instead of three. It is said that it was meant to better illustrate the activities of the of the company, no longer active only in nutrition, and to reflect the average modern family of two of two children.
The logo we know now has just been simplified. The tree is supposed to represent an oak and the birds thrushes.
8.2 The First Mover
Nestle follows the first mover advantage strategy which means that the company enters in an early stage the emerging markets, in order to establish a network there before competitors such as Unilever do so. The first step they make is to establish a substantial position by selling basic products such as infant formula and condensed milk to the customer with the goal to build up commending positions in each niche.
8.3 Acquisition
In order to save the costly process of establishing of establishing a brand name, Nestle simply purchases local brand names which the consumer is accustomed to. This helps the company to overcome cultural barriers and customer resentments to foreign brands. After these niches of basic of basic food supply are filled Nestle moves on into the more upscale segments such as chocolate, soft drinks and the like. Their strategy is to establish a basis and then expand into more niches as demand rises. Connected to the rising demand is the rising income level as the population can afford to spend more money on food products. The company uses that approach in order to the convenient fact that the consumer is easier to be reached because he is accustomed to this brand name and they think they know what they are buying. Acquisition contributes about 2/3 to Nestle’s growth rate, hence this emphasizes the importance of this of this functional part of the of the company.
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8.4 Relying on Existing Distribution Channel
Consequently, marketing is easier and less costly because a reputation, a distribution channel and customer loyalty already exists for that product with that brand name. As a result Nestle can focus its distinctive competencies on product improvement and technological aspects such as process innovation.
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9. Marketing tactics ‐ the marketing mix 9.1 Product strategy
No matter how effective the promotion and packaging, a firm will find it very difficult to market a product which fails to satisfy a consumer need. Let us discuss kit Kat here. Kit Kat owes much of its of its success to a unique dual appeal ‐ as a four‐finger chocolate bar, (known in the confectionery trade as a countline countline), ), sold at corner shops and newsagents, but also as a two‐finger biscuit sold in supermarkets. It is a product that has endured because of its of its wide appeal across the age ranges and to both sexes. Altering the actual product is potentially a very hazardous act for an established brand name as it risks altering the consumer perceptions of quality built up over decades. Tampering with the recognised core qualities could well damage the integrity of the brand. For Kit Kat, these intrinsic elements of the of the brand, or unique selling points include the:
•
chocolate fingers
•
foil and band wrapping, unique in the countlines market and seen as an important feature which encourages involvement and sharing by consumers
•
well‐known strapline ‐ Have a Break, Have a Kit Kat. Kit Kat.
In spite of the of the risks of altering of altering the product, the two finger bar and multipacks were introduced in the 1960s to meet the increased needs of supermarket shopping and more recently, Orange, Mint and Dark Chocolate Kit Kats have been available for limited periods. In the third week that Kit Kat Mint was available, it more than doubled total Kit Kat Sales. The Orange Kit Kat proved particularly popular with sales of 38 million bars in just three weeks. It provided very positive market research results. While they are seen as novelties, they can also be used to provide reassurance and reinforcement of the of the core attributes of the of the original established brand name.
Special editions are used primarily as promotional tools. Market research has shown that consumers prefer special editions to be available for limited periods only and that consumers are likely to purchase the original Kit Kat at the same time or shortly after. (They are, therefore, a good way of injecting new life into the Kit Kat product life cycle cycle). ). Depending on their popularity, some special
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editions are introduced more than once. The Orange Kit Kat has proved so popular that the two‐ finger multipacks are now permanently available.
Apart from these variants variants,, the intrinsic characteristics of the Kit Kat product and packaging have changed very little during the last sixty years. Although some minor, subtle changes have been made in packaging, merchandising and sales promotions promotions,, a Kit Kat from the 1930s would be instantly recognisable to modern consumers today.
9.2 Pricing strategy
A key advantage of maintaining a strong brand image in a competitive market is a degree of flexibility in the pricing strategy. It is a common characteristic of imperfectly of imperfectly competitive markets for producers to concentrate on non‐price competition competition.. When looking at the pricing strategy for Kit Kat, it can be seen from the figures that the real price has remained remarkably stable over the last sixty years.
9.3 Promotional strategy
Nestle has used both ATL and BTL options in its IMC activities. And the company has laid great emphasis on marketing, particularly on IMC activities. Marketing and administrative expenses rose by 110 basis points to 33.7% of sales. Nestlé increased their media spend by 10% in constant currencies, thereby taking further advantage of lower media rates in many markets. Investment in R&D was up 10 basis points, expanding Nestlé’s R&D capabilities – capabilities – especially in developing countries – and further fuelling Nestlé’s innovation pipeline. These actions demonstrate our commitment to delivering in the short term whilst continuing to invest for the long term.
Nestlé has used a wide range of promotional tactics with Kit Kat. Promotion offers have included free bars in the multi‐bar family packs and an instant win deal with Burger King in 1996. This promotion, where over 75 million free burgers were on offer, increased sales of Kit Kat by an estimated 30% In 1998, an on‐pack promotion featuring 'The Simpsons,' with the chance to win £20,000 cash and hundreds of other of other prizes, increased sales of Kit of Kit Kat by a staggering 41%
Advertising plays an extremely important part in the confectionery industry industry,, with spend approaching £114 million in 1996. The Have a Break, Have a Kit Kat Kit Kat theme appeared briefly in 1939, but has been
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the on‐going Kit Kat slogan, or strapline, since the mid 1950s. Kit Kat's advertising is concentrated in two media media::
•
television commercials ‐ which follow the well‐known Have a Break tradition
•
posters ‐ where the powerful colours of the pack and product are used to dramatise the message.
A particular challenge for the advertisers is to appeal to both the consumers and the purchasers. Women account for two thirds of all of all confectionery sales, but a large proportion of these of these purchases are subsequently consumed by children. Men eat as much as they purchase suggesting they are less generous!
9.4 Distribution strategy
Nestlé has developed distribution channels which ensure the availability of Kit of Kit Kat to buy wherever and whenever the consumer wishes to purchase it. Sales of confectionery depend heavily on its availability, with market research showing that well over 60of all purchases are made on impulse. Consequently, Nestlé tries to supply as many outlets as possible ‐ both wholesaler and retailer channels.
Point of sale merchandising is also important when consumers are making instant, snap decisions
from a wide range of products on view. Instantly recognisable packaging also helps to tempt customers.. Shoe shops, for example, have recently been identified as having potential for customers confectionery sales owing to the large number of families that visit them. It is also predicted that confectionery, along with all foodstuffs, will become available through cable and interactive television, videophones and the Internet.
Internationally, Kit Kat is now also manufactured in Canada, Germany, India, Malaysia, China, Japan, Australia, South Africa and the United States. It is available in more than 100 countries throughout the World.
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10.
Distribution Structure Of Nestle Of Nestle
Nestlé follows more or less same distribution channel all over the world
Mother Godown at Ghaziabad, Delhi –UP
Respective C&F Agents
Distributors as per assigned territories
Wholesalers in their area.
Retailers in their respective territories
End Consumer
10.1 Selection of distributors of distributors
Criteria are: 10.1.1 Capital investment‐
This is dependent not only on the present required turnovers but also on the estimated future capital investments that will be required by the distributor (based on company’s growth plans in the area). Amounts required vary from area to area and markets to markets.
10.1.2 Relevant experiences
It is imperative that the distributor has had some prior experience as a channel member in the FMCG sector so that no training is required to be imparted to him on aspects of the business. The
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distributor should not be dealing in competitor’s products and should be able to function as a dedicated channel for Nestle. For example, while deciding on a distributor for chocolates, an obvious preference would be an existing distributor for other products of Nestle of Nestle
10.1.3 Infrastructure
Appropriate infrastructure (depending on the market served and overall volumes ) Should be there‐ a) Godowns / storage space. For chocolates, air conditioned godown space (with wooden padding will be required). b) Delivery vehicles c) Salesmen
However there are no written guidelines that are fixed for the above criteria and the company exercises its discretion based on markets to be served.
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11.
Performance
11.1 Group sales, profitability and financial position
In 2009, the Nestlé Group’s sales reached CHF 107.6 billion, with organic growth of 4.1%, including real internal growth of 1.9%. Foreign exchange impacted sales by ‐5.5% and divestitures, net of acquisitions, by ‐0.7%. Food and Beverages’ sales reached CHF 99.8 billion, with organic growth of 3.9%, including real internal growth of 1.6%. of 1.6%. Foreign exchange impacted Food and Beverages’ sales by ‐5.7% and divestitures, net of acquisitions, of acquisitions, by ‐0.7%.
Nestlé’s EBIT margin was up 30 basis points reported, and up 40 basis points in constant currencies, to 14.6%, with an EBIT of CHF 15.7 billion. The EBIT margin for Food and Beverages was also up 30 basis points reported, and up 40 basis points in constant currencies.
Underlying earnings per share rose by 9.6% from CHF 2.82 to CHF 3.09, or 16.3% in constant currencies. Net profit was CHF 10.4 billion in 2009 and earnings per share were CHF 2.92. These figures are not directly comparable with 2008 because of the of the CHF 9.2 billion profit on the disposal of 24.8% of Alcon of Alcon in 2008.
The Group's operating cash flow rose by 67% or CHF 7.2 billion to CHF 17.9 billion, while free cash flow increased to CHF 12.4 billion. This improvement reflects a particularly strong working capital performance. Nestlé’s net debt reached CHF 18.1 billion. The group’s return on invested capital (ROIC) including goodwill increased by 90 basis points to 15.6% and by 30 basis points to 35.1% excluding goodwill. In line with changes in segment reporting, the ROIC calculation has been restated on a comparable basis 11.2 Sales and EBIT margin by operating segment
In 2009, the organic growth of Nestlé Food and Beverages amounted to 4.8% in the Americas, 1.2% in Europe and 7.4% in Asia, Oceania and Africa. The results were broad‐ based across all categories and regions, combining strong top and bottom line performance, thereby demonstrating the disciplined alignment of our people behind clear strategic priorities fuelled by higher levels of brand of brand support and R&D investment.
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EBIT Margins
Jan.‐Dec. 2009 Jan.‐Dec. 2009 Sales in CHF
Organic Growth
millions
(%)
Change vs. Jan.‐Dec. 2009
Jan.‐Dec 2008
Food & Beverages
‐ Zone Americas
32 168
+ 6.5
16.8%
+20 bps
‐ Zone Europe
22 528
+ 0.3
12.4%
0 bps
15 891
+ 6.7
16.7%
+20 bps
Nestlé Waters
9 061
‐ 1.4
7.0%
+100 bps
Nestlé Nutrition
9 963
+ 2.8
17.4%
+10 bps
Other Food & Beverages
10 187
+ 6.8
15.7%
+80 bps
Nestlé Food and Beverages
99 798
+ 3.9
13.1%
+30 bps
Pharma (incl. Alcon)
7 820
+ 6.7
33.5%
‐60 bps
107 618
+ 4.1
14.6%
+30 bps
‐ Zone Asia, Oceania and Africa
Total Group
Nestlé Waters, Nestlé Nutrition and Other and Other Food Food & & Beverages are not included not included in in the Zones. the Zones. Nestlé Professional activities Professional activities have also been taken out of out of the the Zones Zones and included and included in in Other Food & Food & Beverages.
11.3 Future Plan
To reach additional 1 billion new consumers in next ten years.
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12.
Conclusion
Nestlé’s is continuously investing in it’s Brands. Nestlé’s success can be attributed to consistency in its marketing marketing,, whilst allowing for minor changes to maintain a modern image. Above all, the brand has enjoyed continuous backing with investment in marketing to both the trade and consumer sectors, enabling it to compete successfully with both established and new products. Continuous reinforcement of the brand message through advertising and promotions has enabled Nestlé’s to sustain its popularity over a long period of time in the face of rapidly changing consumer attitudes and tastes and consumption patterns.
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13.
References
http://www.marketingteacher.com/ http://www.marke tingteacher.com/SWOT/nestle_swo SWOT/nestle_swot.html t.html http://www.marketingteacher.com/ http://www.marke tingteacher.com/SWOT/nestle_swo SWOT/nestle_swot.html t.html http://www.nestle.com/ http://www.purina.com/ http://www1.nespresso.com/precom/ http://www1.nespresso .com/precom/index.php?checkCookie=1 index.php?checkCookie=1 http://www.nestle‐nutrition.com/Public/Default.aspx www.youtube.com
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