Case Facts:s
Intro
Sales: $116.62bln in 2010, employees – 280K 280K In ’97, strategized to become leading nutrition, health and wellness (NHW) company in the world Over next 13 years, NHW strategy influenced strategic decisions regarding M&A, product improvements, and and packaging innovations innovations
Birth of a Strategy
was resistant to radical change for s hort-term CEO and Chairman John Brabeck was profits, but valued strategic broad strategic changes changes with the potential potential to produce strong strong growth Brabeck created nutrition strategic business division due to the rising health concerns, changing market and shifting preferences about food Acquisition of Powerbar deemed as the first move towards the NHW s trategy
60/40+
Adopted 60/40+ measure to improve nutrition of its products Removing salt, sugar, fat and replacing them with whole grains, calcium, Omegao 3s, antioxidants etc.
Building Nestle Nutrition
In 2005, Brabeck unified divisions of healthcare nutrition, performance nutrition, infant nutrition and weight management under control of one executive team Nestle Nutrition Drew larger investments in R&D and salesforce and marketing spend on NHW o
I nsight: nsi ght: Uni fying fyi ng divisions divi sions li kely to r esult in i n bett bette er mana anagem geme ent output output and i nvestme nvestments nts channeled channeled will possi possibly bly help i n establis establishi hing ng the desir desir ed brand image? Initial investments made in Powerbar, Pria and Goodstart struggled to grow sales and market share Introduced cross-company packaging innovation Nestle Nutritional Compass – a a nutrition manual for consumers o
Commented [U1]: Structured visualization of health benefits influences positive consumer behavior
Created Corporate Wellness Unit to drive NHW across the organization Focus of the unit laid on delivering better- tasting and ‘better for you’ products o and solutions by accelerating the adoption of 60/40+ and the Nutritional Compass o Coordinated Nestle’s network of Wellness Champions located strategically around the globe to aid the quick implementation of NHW tools at local and regional levels
Acquisitions Uncle Toby
Acquired in May 2006 ($670mln); excluded salty and savory snacks from acquisition
Jenny Craig
$600mln deal, and entered $30bln weight-loss management industry (already owned Lean Cuisine in the same industry)
Medical Nutrition arm of Novartis
$2.5bln meal, raised market share of medical nutrition market from 7%-25% (Dec ’06) Leverage Novartis’ pharma background and relationship with industry thought leaders to fortify position in healthcare nutrition
Geber Baby Foods (Novartis)
$5.5bln (Apr ’07). Acquisition amounted to $9.5bln+, assuring Nestle’s Nutrition division account for 10% of total revenue Likely to strengthen Nestle’s infant nutrition presence in US and holding in canned foods Laudable acquisition as nutritional food sales for Nestle increasing 8% y/y (compared with 1%-2% of other products)
I nsight: Acquisition of J enny Cr aig could have projected Nestle’s position as an organization promoting healthy lifestyle, not just healthy eating?
Withdrew potential merger with Pepsi in order to avoid digressing from the NHW focus 2007: CFO Polman identified $70bln opportunity in delivering affordable nutrition to developing markets and $75bln opportunity in NHW for Nestle Foods and Beverages Committed investments worth $1.5bln over next 10 years to startup and growtho phase companies in NHW Sales in 2007 grew to $11bln
Established industry’s largest R&D network and largest publisher of nutritional information for scientists Nutritional compass featured over 90% of packaging, and an average 20% of products for sale were tested and improved annually through 60/40+
R&D
Employees: 5000 and invested an average of $2bln annually Highlights: partnership with 1500 universities and more than 100,000 scientists across suppliers and governments to develop new nutrition technology across suppliers and government to develop new nutrition technology Semblance with pharma R&D o
Bulcke Takes the Reins
Bulcke’s strategy: shift Nestle from a ‘commoditized, raw-materials-based food and beverages company to an added-value, science-inspired nutrition, health and wellness company’
Dealing with Contradictions
Acquired Kraft’s frozen pizza business, including DiGorno, Tombstone, and California Pizza Kitchen brands for $3.7bln Bulcke reiterated NHW’s mission was to deliver pleasurable food that was healthier
I nsight: Channeled efforts towards maki ng indulgent food with less fats and calories, thereby carvi ng a niche market for themselves Looking Ahead
Where we are: spot between food and pharma industry
