a. Overview of company
Nestlé SA. is a Swiss transnational food
and drink company which first started off in 1867
in Vevey, Switzerland by founder Henri Nestlé
whom was a trained pharmacist. He developed one of the first infant foods as an
alternative to those mothers who could not breastfeed their babies. The product
was a success which made the company’s popularity grew and many other
businesses wanted to merge and become partners with Nestlé. Nestlé is
the largest food company in the world since 2014, measured by profit, revenue,
assets and market value. It is the world’s leading nutrition, health and
wellness company with 413 factories in 85 countries. They also sell their
products in 189 countries with a total of 323,000 staff worldwide. With more
than 140 years of history, Nestlé continues its
founder’s legacy to improves the lives of people with the mission of “Good
Food, Good Life” to provide the consumers with the most nutritious choices of
food and beverage categories. Nestlé started its operations in Singapore
in 1912 and has earned the trust of being a food manufacturer with the highest
safety and quality standards. Nestlé brands are household names in Singapore such
as MILO, MAGGI, KITKAT, NESCAFE and many more.
Nestlé company is the leading player in the
industry sector, Fast Moving Consumer Goods (FMCG). In the Fast Moving Consumer
Goods industry, products sold generally have a short shelf live which are sold
quickly and are relatively low In cost. The profit margin made are relatively
small, however since they are usually sold in large quantities, the cumulative
profits can be substantial. Fast Moving Consumer Goods industry is an example
of low margin and high volume business. A few examples of other Fast Moving
Consumer Goods companies are Johnson & Johnson, PepsiCo and The Coca-Cola
Company.
Over the years, have more
than 2,000 brands from global icons to the local favourites. Their portfolio
covers almost every food and beverage categories with many products under the
brand categories of baby food, bottled water, chocolate and confectionery,
cereals, coffee, chilled and frozen food, drinks, ice cream, pet care, health
care nutrition and professional food service.
b. Customer clients/target market
c. Competitors
Although Nestlé is the top Fast Moving
Consumer Goods (FCMG) company in the world as of now, there are a few other
competitors who try harder every year to overtake Nestlé as the top Fast Moving
Consumer Goods (FCMG) company. A few examples of their top competitors are
Phillip Morris International who is being placed second after Nestlé, PepsiCo
in third place, Procter and Gamble (P&G) in fourth place, Unilever in fifth
place and The Coca Cola Company in sixth place and many more.
SWOT analysis of Nestlé
Strength
-Well renowned brand around the world : Nestlé creates awareness for each of the their various food
brands by doing individual branding. It helps Nestlé because for example if one
of their brand like MILO is affected, it will not affect the sales of MAGGI.
-Large workforce : Nestlé has 323,000 staffs
around the world working to make its products available to every corner of the
world.
-Broad product portfolio: Nestlé has a
wide product portfolio with more than 8000 brands/products with categories such
as coffee, baby food and mineral water. Each product categories is structured
in a way that it satisfies the different needs and wants of consumers
- Nestlé Research and Development Centre: Nestlé
have the largest food and nutrition research organization in the world with the
strongest research and designing teams that introduces new products throughout
the year.
Weakness
-MAGGI Controversy: In 2015, MAGGI was banned in India as
additives were being found which were harmful. Although the ban was lifted
after 6 months, the impact was already made as Nestlé lost
about an estimated amount of 20% of their market share in the instant noodles
market in India.
-Criticism: Nestlé is the world’s largest
food company, however they have been criticized due to their unethical
promotion, pollution, manipulating uneducated mothers, price fixing and
mislabeling which makes them less trust worthy.
Opportunities
-Partnerships: Nestlé is opening new
doors to the company by engaging in partnerships with major companies such as
The Coca-Cola Company and many more. It is one of the main shareholders of the
world’s largest cosmetics brand,
L’Oreal. Thus, partnering with major companies
can improve the company in it growth.
-Demand for healthier food products: Over the years, there
has been a increase in demand for healthier products as people become more
conscious towards their health. Nestlé can introduce more
health-based products to their customers.
-New distribution channels: Nestlé can
open up to new distribution channels such as amazon prime
-Changes in lifestyle: There are more woman in the working
society, people tend to have longer working hours and more single-person
households would lead to an increase in demand for prepackaged food.
-Increased disposable income: Some countries such as China
may have an increase in their disposable income which leads to an increase in
the demand for luxury items such as ice cream and pet food.
Threats
-Increase in price of raw goods: An increase in raw
materials would lead to an increase in price of the final product. This may
lead to a decrease in total amount of sales and customers may attempt to find
other brands which are cheaper as compared to Nestlé
products.
-Competition in the market: With a increasing number of both
local and national companies entering the market, it is getting harder for the
companies to differentiate itself from the others.
-Changing trend: Chocolate and chocolate related products are
major products of Nestlé. The increase in trend to
become more health conscious may lead to decrease in the sales of their
chocolate in the future
d. Sponsorship involvement
With many brands under the company Nestlé, Nestlé has sponsored several events not only under
the name ‘Nestlé’ but also the brand names under Nestlé such as the name
‘Nestlé MILO’ , ‘Nestlé Kit Kat’ and many more. A few examples of events or programs
that Nestlé has sponsored was the Singapore Sports Council for Youth Olympic
Games training that Nestlé Milo has sponsored previously by pumping in more
than $3 Million into the youth sports development. This allows the youths to go
for more overseas competitions and trainings which is a key factor as they can
familiarize themselves with their competitors. The sponsorship is the largest corporate
contribution received by the Singapore Sports Council and is also Nestlé
MILO’s largest one-time investment in local sports.
Nestlé Kit
Kat also sponsored Sky World Cup in UK’s biggest mobile campaign. Kit Kat
sponsored Sky’s World Cup coverage across all smartphones, iPhone, iPod Touch
and all other WAP-enabled mobile devices. This sponsorship allows audiences to
download a Kit Kat Red Card app from itunes
to be updated with the World Cup Statistics.
Currently,
Nestlé MILO is the official club sponsor of FC Barcelona in the category of
Tonic Food Drink. The sponsorship also includes the Nestlé Nesquik brand in Europe, the Middle East
and Africa. This sponsorship between FC Barcelona and Nestlé Milo is a first with a sports club in Nestlé’s
history.
There are many possible reasons
for Nestlé participation in these events. One of the most
possible reasons is to increase brand awareness and image enhancement. The
events Nestlé have sponsored are major events that would reach out to a large
scale of people. Through these sponsorships they can reach out to not only
their target market but also their potential customers that may come across
their brands. Another reason for their sponsorship may also be because the
their partner believes and promotes the same value as Nestlé. For example, both
FC Barcelona and Nestlé Milo both emphasizes a lot particularly on the
importance of education and healthy eating. Nestlé Milo promotes nutrition and
sport programs which is the same values that define the club. By educating
youths about the importance of physical activity as part of a healthy
lifestyle, they can build a better future from young. This sponsorship lead to
FC Barcelona developing a series of sports program that could encourage youths
to take part in sports and enjoy a healthy lifestyle from young. Nestlé aim is
to enhance the quality of life and to contribute to a healthier future. The
sponsorships that Nestlé does would definitely cover these values to make a
difference in millions of lives since they are the largest food manufacturer
that would reach out to majority of the world.
The video shown below is a
program that happened because of the partnership between Nestlé Milo and FC Barcelona
As shown in the video, young
athletes are given the opportunity to experience one of the best football
programs in the world. This gives young athletes the chance to achieve their
dreams of being a champion with their skills and winning attitude as only the
top 10 out of 140 would be selected. Being a sponsor of this program would
allow the parents and the young athletes to be thankful towards Nestlé Milo for making this program possible and giving the
young athletes a chance to achieve what they want through their hard work and
motivation. With that, they would have a positive impression towards the
company which may make them purchase more from the company which increases the
sales of the company.
e. Sponsorship recommendation and justification
Since Nestlé aims to enhance the
quality of life and contribute to a healthier future. A mega event such as the Commonwealth
games can meet the objective of Nestlé. The Commonwealth games have a total of
53 countries participating. They have a cumulative number of 1.5 billion
audiences all over the world watching this event from their country. This would
reach out to a large scale of people. If Nestlé were to sponsor this event,
they can have programs that would help develop interest for youths to train and
participate in the Commonwealth games in the future. This would allow them to
start from young and have an active lifestyle. Being a sponsor for a mega event
would allow your logo to be seen by many. From that 1.5 billion audiences
watching the event over the span of 1,100 hours of live television, the
audiences would be able to recognize the brand when they come across it in
their own country since Nestlé products are sold in almost every corner of the
world. This will help increase the sales of Nestlé, gain brand recognition and
brand awareness.
