Nestlé operates in 200 nations, which few of them are not yet members of United Nations. It runs 511 factories and employs 247,000 executives, managers, staff and production workers worldwide.
The company produces 127,000 different types and sizes of products, to fit local preferences. For example, the global brand Nescafe produces more than 100 billion cups a year. But there are more than 200 different formulations to suit local tastes.
Nestlé always tries to adapt to the environment where they market their products. It includes the “uncontrollable” environment factors, which are STEEPLE and competitors.
1. SOCIAL AND CULTURAL
• In Indonesia and Malaysia, all the products must be “halal” (hygienic and not containing any materials forbidden according to the Islamic faith)
In Indonesia and Malaysia, most of the population is Muslim, so they must not consume products that are not halal. So any Nestle products in those countries must be certified as “halal” by authorized Islamic certification bodies. (More will be discussed in Political section)
• In China, the government banned Nestlé’s TV commercial which showed an image of a laughing pig. It was because the government doesn’t want to offend Muslim people in China. Islam is a minority religion in China, where there are only 2% of the people there are Muslim.
• Nestle always prints their labels in local languages.
To obey national requirements and gain government’s approval, Nestlé always use the “primary common language”, either on the country’s language or together with other language widely spoken. For example:
– In Malaysia, the labels are printed in Malay and English
– In South Africa, the labels are printed in Sesotho, Zulu, Afrikaans, and English.
– In Vietnam, the labels are printed in Vietnamese.
• In countries with modern lifestyles (such as USA), people tend to be too busy for breakfast, so Nestle launched variety of breakfast cereals, such as Koko Crunch, Corn Flakes, Honey Star, etc; they contain lots of vitamins and minerals, and children also love the taste.
• Nestlé uses genetically modified harvest goods for their products. They assured that this technology is not dangerous for our health. This technology is also used to raise the quality of the products. It is used especially in Indonesia, where the technology is commonly used to make Tofu and Tempe.
• In Japan and China, the technology is already developed and refined, so they always follow the product development, like instant or frozen food.
• In Japan, Nestlé made frozen chocolate in the summer, so it won’t easily melt. They made Kit Kat I-Stick which cream and chocolate have been improved so it doesn’t become stiff when frozen.
• Nestlé developed the ActiCaf ingredient now used in the ActiCaf PowerBar to allow caffeine to be absorbed by the body more slowly. Slower absorption means that the caffeine can act longer and increase the mind’s ability to stay alert for a long time. It commonly consumed by athletes.
3. ECONOMIC AND MARKET CONDITION
• In Brazil, Nestlé opened a factory which aimed at poorer consumers. It was focused on the program called “Popularly Positioned Products”, which are products that in their formulation size, packaging and distribution channel respond to the specific needs of the low income population.
In Brazil, 3800 women sell Nestlé door to door. They get their supplies at small distribution centers placed in local communities and rural areas.
• Nestlé sell cheaper products in developed countries
In north-east Brazil and recently in Indonesia, Nestlé launched 200g packs of Ideal milk powder, enriched with iron, calcium and vitamin.
In Brazil, Nestle also sell smaller packs of Bono and Negresco biscuits, and Nescafe Dolca, a milder soluble coffee.
• Nestle tries to encourage breastfeeding, especially in developing countries such as Africa. Infant formula can be used just as a supplement, not for a replacement for breast milk. Nestlé’s infant formula labels are totally in line with WHO recommendation and national regulations. They state: “breastfeeding is best for your baby”.
• In those countries (in Africa) where the people might be illiterate, Nestle also prints instructions on how to prepare infant formula correctly, included with the pictures.
• Malaysia is currently the biggest Halal producer in the Nestlé world, it is appointed as the Halal Centre of Excellence for Nestlé worldwide. Products manufactured locally are certified by the Department of Islamic Development Malaysia (JAKIM). Imported products are certified by the Islamic Food & Nutrition Council of America (IFANCA).
• In Indonesia, the products also have to get certificates from MUI (Majelis Ulama Indonesia- Indonesian Muslim Committee) to state that the products are Halal, and also from BPOM (Badan Pengawas Obat dan Makanan- board of Control for Medication and food) to ensure that the products are safe for our health.
• To obey the Foreign Capital Investment regulation in Indonesia, Nestle made a joint venture called “PT NESTLE INDOFOOD CITARASA INDONESIA” which Indofood and Nestle own 50% of shares each.
• Nestle and Coca Cola also made a 50:50 joint venture in water bottling called Waters Partners Bottling (WPB). This joint venture has acquired a 65% majority share of the Indonesian bottled water company, PT Ades Alindo Putrasetia, Tbk.
7. ENVIROMENTAL PROTECTION
• Due to a major focus on water management, the consumption of water in Nestlé manufacturing operations decreased by 9.4% to 159 mio m3 in 2005. These improvements are in line with the Nestlé Commitments on Water which include the reduction of the amount of water used per kilo of food and beverage produced and taking care that water we discharge into the environment is clean.
• In Japan, by starting to pay attention at the development stage to the impact products have on the environment, Nestlé feels that it can reduce waste outputs from the factory and from the consumer’s home and that it can cut the waste from Nestlé business activities at the end.
Under the slogan of “War on Waste”, Nestlé’s staff members in each division unit use less paper and electricity and promote waste recycling.
• In 2003, as part of Environment Month Nestle distributed coffee mugs with the Nestle Eco Care mark to about 3,600 persons, including the staff of affiliated companies and the temporary staff. At the same time, management prohibited the use of paper cups as far as possible.
• Nestlé also built clean drinking water facility near its factory in Srilanka.
• As part of the Nestlé Environmental Management System (NEMS), which is aligned with ISO 14001, in 2005 we systematically reviewed our factories’ efforts to minimize air emissions. The review confirmed the implementation of measures such as using cleaner fuel with a lower sulfur content, moving to gas, and ensuring that boiler operations are optimized
The World’s Top Food Companies by Food Revenues in 2004
General Mills ($11.1bn)
Kellogg Co ($9.6bn)
Kraft Foods ($25.7bn)
Danone Group ($8.5bn)
Non-Alcoholic Beverages Worldwide
The Top 14 Non-Alcoholic Beverage Companies in 2003 by worldwide revenues
Coca-Cola (Juice, Soft Drinks, Water) ($21bn)
Suntory (Water, Soft Drinks) ($4.4bn) Nestlé (Coffee, Soft Drinks, Water) ($19bn)
Starbucks (Coffee) ($4.0bn) PepsiCo (Juice, Soft Drinks, Water) ($10bn)
The Top Six Petfood Companies in the US in 2003/4 by Market Share
Nestlé Purina (31%)
Colgate-Palmolive (11%) Procter & Gamble (Iams) (12%)
Delmonte (8%) Mars Inc (11%)
Nestle’s total revenue in 2005 is 98,5 billion with net income 5,05 billion.
Market in Bottled water
Market value Nestle Waters
TOTAL $33.7bn 16.3% 14.2% 4.6% 4.1%
Europe $16.1bn 15.5% 13.1% 1.5% 1.0%
North America $8.0bn 31.1% 14.1% 8.3% 9.7%
Latin America $4.1bn 4.4% 14.0% 8.4% 10.2%
AOA $5.5bn 6.5% 17.5% 5.5% 0.8%