Professional Documents
Culture Documents
Nestle Final Project Report
Nestle Final Project Report
International Marketing
Final Project
Submitted to: Mr. Aly Raza Syed By: 04 Qasim Arsalan F06MD003 08 Talat Hussain Khan F06MD015 11 Rabya Jalil F06MD019 18 Hassaan Muzaffar F06MD040 22 Syed Rizwan Ali Jafri F06MD053
Table of Contents
Title
INTRODUCTION HISTORY
Notable Facts Company Information, Business Lines
Page 3 4 5 6 8 8 9 10 10 11 12 13 13 14 14 15 15 19 19 20 21 21 23 24 25
HIERARCHY
Pakistan Key positions occupied Site locations Head Offices and Factory Locations
FINANCIALS
Figures - International 9 Month Sales Presentation Figures - Pakistan
PROBLEMS/OPPORTUNITIES
Problems, Growth drivers, Opportunities, Direction for 2008
27
INTRODUCTION
(SOURCE: www.Nestl.pk, www.Nestl.com)
Nestl is a Switzerland Based International Food Group and is a merger of two companies:
Through its effective marketing and a vast sales and distribution network throughout the country, it ensure that its products are made available to consumers whenever, where ever and however. Nestl has the unique ability to provide a complete range of food products, services and well known brands to meet the needs of consumers around the world. It is not a faceless corporation catering to faceless consumers, but a human company providing a response to individual human needs. It respects the cultures of the countries it operates in and recognizes the need for quality of life of their people. Nestl Pakistan is proud of its commitment to excellence in providing value and services to its consumers Nestl Pakistan Ltd is registered on the Karachi and Lahore stock exchange. It operates in many ways but people, products and brands are the main flag bearers of the companys image. Nestl Pakistan envisage to grow in the shortest possible time into a food company with the unique ability to meet the needs of consumers of every age group - from infancy to old age, for nutrition and pleasure, through development of a large variety of food categories of the highest quality. The Company's strategy is guided by several fundamental principles. Nestl's existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. Nestl Pakistan visualizes the company to develop an extremely motivated and professionally trained work force, which would drive growth through innovation and renovation. It fulfills its social responsibilities and environment is also taken care of. The Company's priority is to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives.
Now Nestl is undisputed leader in food industry, with more than 509 factories in 83 countries out of which 220 are in Europe, 153 in America, 136 in Africa and Oceania.
HISTORY
(SOURCE: www.Nestl.pk, www.Nestl.com)
1860-1905
In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestl's new formula saved the child's life, and soon, Farine Lacte Henri Nestl was being sold in much of Europe. Henri Nestl endowed his company with the symbol derived from his name. His family coat of arms, the nest with a mother bird protecting her young, became the Company's logo and a symbol of the Company's care and attitude to life-long nutrition. The Nestl nest represents the nourishment, security and sense of family that are so essential to life.
1905-1938
In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestl's production had more than doubled. After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestl's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestl's first expansion into new products, with chocolate the Company's second most important activity.
1938-1975
Nestl felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $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, Nescaf, which was a staple drink of the US military. Nestl's production and sales rose in the wartime economy. The end of World War II was the beginning of a dynamic phase for Nestl. Growth accelerated and companies were acquired. In 1947 came a lot of mergers. Diversification came with a shareholding in L'Oral in 1974.
1975-1996
Nestl divested a number of businesses1980 / 1984. In 1984, Nestl's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation.
Nestl's growth in the developing world partially offset a slowdown in the Company's traditional markets.
1996-2000
The first half of the 1990s proved to be a favorable time for Nestl: trade barriers crumbled and world economic markets developed into a series of more or less integrated trading areas. The opening of Central and Eastern Europe, as well as China, and a general trend towards liberalization of direct foreign investment was good news for a company with interests as far-flung and diverse as Nestl. While progress since then has not been as encouraging, the overall trends remain positive. Nestl opened the 20th century by merging with the Anglo-Swiss Condensed Milk Company to broaden its product range and widen its geographical scope.
2000-present
In July 2000, Nestl launched a Group-wide initiative called GLOBE (Global Business Excellence), aimed at harmonizing and simplifying business process architecture; enabling Nestl to realize the advantages of a global leader while minimizing the drawbacks of size. Nestl was First to Produce: Infant milk, Condensed milk, Milk chocolate, Soluble coffee and Freeze-dried coffee.
NOTABLE FACTS
Nestl, based in Switzerland, is the world's largest food company. It manufactures a wide variety of food products, from chocolate to frozen dinners to pet food, and is one of the top four water bottling companies in the world. It controls one-third of the American bottled water market, selling water under 70 different brand names. Bottled water contributes to the plastic waste problem and seizes water that should remain a shared public resource. Nestl has been repeatedly sued for the impacts of its bottled water operations on communities and for false advertising of its products. Nestl has been criticized internationally for its aggressive marketing of infant formula in countries where potable water is scarce, leading to a reduction in breastfeeding and increased risk for infants. Nestl is also one of the world's largest chocolate producers, and critics charge that this makes it a contributor to child and forced labor problems in cocoa-growing nations.
Switzerland-based
Nestl S.A. manufactures a wide variety of food products from chocolate to frozen dinners to pet food. In addition, Nestl is one of the most prominent bottled water companies in the world, and also produces personal and health care products. Nestl SA employs 247,000.
According to a 2006 global survey of online consumers by the Reputation Institute, Nestl has a reputation score of 70.4 on a scale of 1100.
COMPANY INFORMATION
Ticker: NESTL Country: PAKISTAN Major Industry: Food & Beverages Sub Industry: Diversified Food 2007 Sales: 28,235,393,000 (Year Ending Jan 2008) Employees: 2,345 (Pakistan as of January 2008) Currency: Pakistan Rupee Market Capital: 61,221,938,400 Fiscal Year Ends: December Shares Outstanding: 45,349,584 Share Type: Ordinary
BUSINESS LINES
Coffee Nescaf, Tasters Choice, Ricor, Ricoffy, Nespresso, Bonka, Zogas, Loumidis
Water Nestl Pure Life, Nestl Aquarel, Perrier, Vittel, Contrex, S.Pellegrino, Acqua Panna, Levissima, Arrowhead, Poland Spring, Deer Park, Ozarka, Hpar, Ice Mountain, Zephyrhills Other beverages Nestea, Nesquik, Nescau, Milo, Carnation, Libbys, Caro, Nestomalt, Nestl Shelf stable Nestl Nido, Nespray, Ninho, Carnation, Milkmaid, La Lechera, Moa, Klim, Gloria, Svelty, Molico, Nestl Omega Plus, Bear Brand, CoffeeMate Chilled Nestl Sveltesse, La Laitire, La Lechera, Ski, Yoco, Svelty, Molico, LC1, Chiquitin Ice cream Nestl Antica Gelateria del Corso, Dreyer's/Edy's, Drumstick/Extrme, Maxibon/Tandem, Mega, Mvenpick, Sin Parar/Sem Parar/Non Stop Infant nutrition Nestl Nan, Lactogen, Beba, Nestogen, Cerelac, Neslac, Nestum, Guigoz, Good Start Performance nutrition PowerBar, Pria, Musashi HealthCare nutrition Nutren, Clinutren, Peptamen, Modulen Bouillons, soups, seasonings, pasta, sauces Maggi, Buitoni, Thomy, Winiary,Torchin Frozen foods (prepared dishes, pizzas) Stouffers, Lean Cuisine, Hot Pockets, Buitoni, Maggi Refrigerated products (cold meat products, dough, pasta, pizzas, sauces, snacks) Nestl, Buitoni, Herta, Toll House Chocolate, confectionery and biscuits Nestl, Crunch, Cailler, Galak/Milkybar, Kit Kat, Smarties, Butterfinger, Aero, Polo FoodServices and professional products Chef, Davigel, Minors 8
HIERARCHY
(Source:
International website www.Nestl.com)
Trevor Clayton, Managing Director, MD Office (Country Head of Operations) Syed Yawar Ali, Chairman Raymond Franke, Head of Finance and Controls, Finance & Control Division
Haseeb Aslam, Country Business Manager Water, Water Division Peter Wuethrich, Head of Technical, Technical Division Salman Nazir, Head of Supply Chain, Supply Chain Division Uzma Qaiser Butt, Head of Human Resources, Human Resources Division Zafar Hussain, Head of Sales, Sales Division
Plot no. 32, Street 3, Sector 1 10/3, Islamabad +92 051 444 5991-3 +92 051 444 5997 Karachi Factory (Water) 23-A, North Western Industrial State, Port Qasim Authority, Karachi +92 021 472 0151-3 +92 021 472 0154
STRATEGIC POSTURE
OF
LOCAL BUSINESS
NESTL IN PAKISTAN
Nestl has been serving Pakistani consumers since 1988, when parent company, the Switzerland-based Nestl SA, first acquired a share in Milkpak Ltd. Today Nestl is fully integrated in Pakistani life, and is recognized as the producer of safe, nutritious and tasty food, and leaders in developing and uplifting the communities in which they operate. Nestl Pakistan ensures that their products are made available to consumers wherever in the country they might be. Convenience is at the heart of the Nestl philosophy, and there aim is to bring products to people's doorsteps
Mission Statement
At Nestl, we believe that research can help us make better food so that people live a better life. Good Food is the primary source of Good Health throughout life. We strive to bring consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to nutrition, health and wellness, Nestl products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestl helps provide selections for all individual taste and lifestyle preferences. Research is a key part of our heritage at Nestl and an essential element our future. We know there is still much to discover about health, wellness and the role of food in our lives, and we continue to search for answers to bring consumers Good Food for Good Life.
innovative portfolio of branded food and beverage products of the highest quality. Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country. We have profitable and diversified high quality food and beverage product portfolio, delivering 60:40+ advantage to consumers, available across all sales channels. Our brands are the preferred choice in their categories. Consumer insight drives all aspects of our marketing and communication efforts. Our communications to the consumer are relevant, cutting-edge, and adhere to the highest standards of responsible communication. Our company is seen as the No. 1 career destination for talented, motivated and ambitious professionals. Our result-oriented organizational structure ensures effective communication and empowered self-management. Our milk collection and agro services will continue to play the primary role in development of the dairy sector in rural Pakistan. Our proactive innovation and renovation culture is the key to our success in the marketplace. Fully integrated systems (Nestl Pakistan, suppliers, customers) ensure efficient business processes. Non-strategic activities and products are outsourced or discontinued.
THE
JOINT VENTURES
Key Dates
1974 LOral 1981 Galderma - (joint venture with LOral) 1990 Cereal Partners Worldwide - (joint venture with General Mills) 1991Beverage Partners Worldwide (formerly CCNR) (joint venture with Coca Cola) 2002 Dairy Partners Americas - (joint venture with Fonterra)
8
consumers, business partners and the large number of national economies in which Nestl operates;
Nestl
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; Nestl 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 right people and ongoing training and development are crucial;
1. Customer
Meeting Consumers Needs: Nestl aims to create value that can be sustained over the long term by meeting consumer needs for nutrition, enjoyment, and quality they can trust. Nestls Communication with consumers is based on the following Basic Principles: 1. Nestl consumer communication should reflect moderation in food consumption, and not encourage over-eating. This is especially important regarding children.
2. Wherever possible, we should show children in healthy energetic pursuits and avoid the portrayal of an inactive lifestyle combined with unhealthy dietary patterns. 3. Nestl consumer communication must be congruent with healthy, balanced diets. Our advertising must not imply the replacement of meals with indulgence or snack foods, nor encourage heavy snacking. 4. Nestl is committed to advertising to children in a way that does not undermine the authority, responsibility, or judgment of parents or care providers. It must not encourage pester power. 5. Nestl advertising to children must not portray children in unsafe situations nor encourage them to accept invitations from people they do not know. 6. Nestl consumer communication about health benefits of products must have a sound nutritional basis. 7. Nestl consumer communication should not exploit violence, bad manners, or profanity. Its content must reflect good taste in a given country and culture. It should not depict attitudes that are discriminatory or offensive to religious, ethnic, political, cultural, or social groups. 8. Nestl communications must not show or encourage the consumption of our products in a way that could be considered dangerous. 9. Regarding advertising placement, it is against our principles to sponsor television and radio programmes or magazines whose strategy for attracting viewers or readers relies on exploiting violence, sex, or encouraging offensive behavior toward others. 10. Nestl consumer communication should not portray competitors products inaccurately, nor denigrate them.
carries out research and development aimed at the constant improvement of infant formula products for use when a safe alternative to breast milk is needed; ensures that its infant food marketing practices conform strictly to national legislation, regulations, or other measures taken by governments to give effect to the aim and principles of the International Code. In addition, in all developing countries, whether or not their governments have taken action to fully implement the International Code, Nestl: gives detailed instructions to its staff on how to implement the International Code; provides a summary of its policy for the information of employees and the public in the form of the Nestl Instructions, which is translated into many languages; regularly conducts training of employees to ensure complete understanding of the Companys responsibilities under the International Code; develops its infant formula labels and educational materials in line with the International Code, after field research and consultation with health authorities has an internal ombudsman system enabling employees to alert the Company on potential non-compliance with the International Code in a confidential way, outside line management structures. In each country the designated ombudsman investigates and reports alleged violations of the International Code directly to a member of the Nestl S.A. Executive Committee at the Companys global headquarters; conducts audits on a regular basis of its companies infant formula marketing practices. Nestl is a founding member of the International Association of Infant Food Manufacturers (IFM), which was formed to facilitate industry dialogue with WHO and governments, and to encourage responsible marketing standards for the infant food industry.
3. Human Rights
Nestl fully supports the United Nations Global Compacts two guiding principles on human rights. Nestl therefore: Supports and respects the protection of international human rights within its sphere of influence (Principle 1) and Ensures that its own companies are not complicit in human rights abuses (Principle 2) Nestl aims to provide an example of good human rights practices throughout its business activities and has an interest in encouraging the improvement of social conditions, which are an important factor for sustainable development. Nestl also recognizes that governments are ultimately responsible for the establishment of a legal framework for protecting human rights within their markets. Nestl expects each market to
respect and follow the local laws and regulations concerning human rights practices.
5. Child Labor
It is generally acknowledged that the causes of child labor are complex and include poverty, differing stages of economic development, social values and cultural circumstances. Nestl believes policy development must take into account the social and legal situation of individual countries. Action to eliminate child labor must be guided by the best interests of the child, as ill-considered policies and commercial measures can make the situation worse for children. Therefore, Nestl: is against all forms of exploitation of children. The Company does not provide employment to children before they have reached the age to have completed their compulsory education, as defined by the appropriate authorities. Nestl expects its industrial suppliers and business partners to apply policies that have the same standards as the Companys Business Principles and reserves the right to audit their compliance. abides by national laws in all countries in which it has operations and complies with the International Labor Organization (ILO) Convention 138 on the Minimum Age for Employment and the ILO Convention 182 on the Worst Forms of Child Labor. The ILO recommendations are based on the United Nations Convention of the Rights of the Child (Article 32); offers its co-operation with the relevant United Nations agencies, governments and the business community in their efforts to deal with the problem of child labor, which include the encouragement of universal primary education and all aspects of economic development worldwide. 8
Rights and responsibilities of shareholders Equitable treatment of shareholders Duties and responsibilities of the board of directors
Disclosure and transparency
Regulatory Authorities
(Source:
Nestl Corporate Business Principles Document, Third Edition, September 2004, Nestl S.A., Public Affairs.)
and
International
Nestl emphasizes that, as a minimum, its employees must comply with the laws applicable in the countries in which it operates. Nestl ensures that the highest standards of responsible conduct are met throughout the organization, by complying in a responsible way with the Nestl Corporate Business Principles, which guide Company activities and relationships worldwide in each sector of business interest. Nestl supports and publicly advocates the United Nations Global Compact and its ten principles, an initiative of the United Nations SecretaryGeneral. The Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards and the environment. Nestl recognizes that increasing globalization is leading to the development of more and more international recommendations. Although, as a general rule, these recommendations are addressed to governments, they inevitably impact on business practices. Among others, Nestl has incorporated relevant International Labor Organization Conventions, and the International (WHO) Code of Marketing of Breast-milk Substitutes into its policies.
Nestl endorses relevant commitments and recommendations for voluntary self-regulation issued by competent sectoral organizations, provided they have been developed in full consultation with the parties concerned. These include the International Chamber of Commerce (ICC) Business Charter for Sustainable Development. Also, Nestl uses the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, approved in June 2000, as a reference point for its Corporate Business Principles.
The PCCI serves as a bridge between the private sector and the Government. It plays an important role in policy formulation by maintaining a constant interaction with the relevant authorities in both the Government and businesses. 3. Securities and Exchange Commission of Pakistan (SECP) The SECP is responsible for providing the rules regulations, policies and guidelines for MNCs, SMEs and all other businesses operating within the 8
boundaries of Pakistan. The SECP is responsible for promoting Corporate Social Responsibility in Pakistan and Regulation, Supervision and Performance in Corporate Governance. The Nestl officials who were interviewed for this purpose mentioned that the policies that Nestl is following are in accordance to the rules stated by the legal requirements of the Government of Pakistan.
(Source:
FINANCIALS
Nestl Pakistan Limited, Financial Report for the year ending 31
Figures - International
Note: CHF means Swiss Franc
2008 9 month sales presentation Source: - Roddy Child-Villiers, Head of Investor Relations
Figures - Pakistan Sales: Sales net Own manufactured Local Export 1,355,324
2007
27,959,032 1,902,751
29,861,783 23,405,417 Goods purchased for resale 593,669 656,591 Less: Sales tax (588,870) (700,703) Trade discounts (1,631,189) (1,330,347) 28,235,393 22,030,958 Profits Profit before taxation 2,005,455 Taxation (642,165) Profit after taxation 1,363,290 2007 2006 (Rupees in 000) 2,549,756 (744,544) 1,805,212
(SOURCE:
PROBLEMS/OPPORTUNITIES
(Source:
Yasir Malik, Operations Officer, Nestl Pakistan Limited, www.Nestl.com)
Problems:
As such, there seems to be no problem that Nestl is facing in almost all zones it is operating in, including The Asia, Oceana and Australia (AOA) region including Pakistan. Also, local competition, although high, provides little in the way of taking away profits from Nestl. There is constant market growth and potential in the market for future growth. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.
The strength of the Nestl Brands Clear priorities for innovations Above average growth with top customers & Discounters
Opportunities:
AOA: growth opportunity Performance is on track Potential for continued growth is promising Aligned organization and portfolio with a vision and a plan Strong management with local expertise
Focus on growing business Focus on delivering return on investment Focus on profitable growth