Abstract:

The case discusses Nestle's brand management strategies in detail. Nestle's brand
portfolio consisted of worldwide corporate strategic brands, strategic worldwide product
brands, regional strategic brands and local brands.
The case also explains how Nestle was successful in developing Kit Kat from a multi-
local brand to a European brand and finally a global brand.
Issues:
!rand management strategies of a large consumer foods company with a global
presence and a large portfolio of brands.
Contents:
"age No.
#ntroduction $
!ac%ground Note $
Nestle's !randing &trategy '
#nternationali(ing the )Kit Kat) !rand *
+ivesting Non-&trategic !rands ,
Exhibits -
Keywords:
Nestle, brand management, strategies, brand portfolio, worldwide, corporate strategic
brands, strategic worldwide product brands, regional strategic brands, local brands, Kit
Kat, multi-local brand, European brand , global brand
"Nestle is a brand in its own right. For consumers, relevance of Nestle as a company
comes first of all through contact with products that are branded Nestle. If we want to be
perceived as the world's leading food company, we have to offer consumers an increasing
amount of products that they can identify as Nestle's."
- Peter Brabeck Letmathe, CEO, Nestle

!
#ntroduction
#n mid-$.//, Nestle &0 1Nestle2, the world's largest consumer pac%aged foods company
based in &wit(erland, ac3uired 4owntree 5ac%intosh "67 14owntree2, in the largest ever
ac3uisition deal of a !ritish company during that time.
4owntree was the world's fourth largest manufacturer of chocolates and confectionery
products, with well-%nown brands li%e Kit Kat, 0fter Eight, &marties and 4olo.
The deal attracted considerable attention all over the world since several bids
8
to ac3uire
4owntree were re9ected. 4owntree claimed that the bids were too low for its valuable,
well-recogni(ed brands.
#n the end, 4owntree was ac3uired by Nestle for :8.; billion, two and a half times the
pre-bid price and eight times the net asset value of the company. This ac3uisition made
Nestle the largest chocolate manufacturer in the world.
0nalysts felt that Nestle had paid :8.; billion because of 4owntree's brands, not its past
financial performance. #ndustry observers wondered how Nestle would manage
4owntree's brands.
4owntree followed a )one product, one brand) policy. The brands were simply Kit Kat,
0fter Eight, &marties and 4olo, 4owntree was never mentioned.
5oreover, 4owntree's brands were not strongly managed European brands. #n fact,
according to an analyst
'
, Kit Kat was one of the worst cases of an over-locali(ed brand of
a company across Europe.
Back"round Note
#n the mid-$/,<s, =enri Nestle 1=enri2, a merchant, chemist, and innovator experimented
with various combinations of cow's mil%, wheat flour and sugar. The resulting product
was meant to be a source of infant nutrition for mothers who were unable to breast-feed
their children.
#n $/,-, his formula saved the life of a prematurely born infant. 6ater that year,
production of the formula, named >arine 6actee Nestle, began in ?evey, and the Nestle
7ompany was formed. =enri wanted to develop his own brands and decided to avoid the
easier route of becoming a private label. =e also wanted to ma%e his company a global
company.
@ithin a few months of establishing his company, =enri began to sell his products in
many European countries. #n the initial years, =enri restructured the organi(ation to
facilitate research, improve product 3uality, and develop new products. #n $/-;, +aniel
"eter, =enri's friend and neighbor, developed mil% chocolate.
=e soon became the world's leading chocolate ma%er. 6ater, his company was ac3uired
by Nestle. #n $.<;, Nestle merged with 0nglo-&wiss 7ondensed 5il% 7ompany, a
manufacturer of mil%-based infant food.
+uring @orld @ar #, there was a huge demand for dairy products and Nestle capitali(ed
on this opportunity by executing military contracts of various countries involved in the
war.
#n $.'/, after eight years of research, Nestle discovered a soluble powder that
revolutioni(ed coffee drin%ing around the world. The product was launched under the
brand name Nescafe and became an instant success.
The end of the @orld @ar ## mar%ed the beginning of a new phase of growth for Nestle.
The company added many new products. #n its effort to expand its operations further,
Nestle merged or ac3uired several companies. #n $.*-, Nestle expanded into culinary
products by merging with 0limentana, a &wiss company that produced and sold 5aggi
soups, spices and other food products in many countries...
E#cer$ts
Nestle%s Brand&n" 'trate"y
The Nestle brand itself had played a %ey role in the company's globali(ation efforts. #n
$..,, about *<A of the total revenues were generated from products covered by the
Nestle corporate brand. Nestle's logo was an important part of the company's corporate
identity. The 'nest' was a graphic translation of =enri Nestle's name, which meant )little
nest.)...
Internat&onal&(&n" the )K&t Kat) Brand
@hen Nestle ac3uired 4owntree's brands in $.//, the ma9or challenge before the
company was managing them. 4owntree had a )one product, one brand) policy. The
brands Kit Kat, 0fter Eights, &marties and 4olo were mar%eted with no mention of
4owntree. 4owntree's brands were not strongly managed European brands. !efore the
$./<s, 'country managers' outside the BK in several European countries managed
4owntree's business. They were free to run their units provided business ob9ectives were
met. The orientation at 4owntree was short-term 9ust to meet annual business ob9ectives
and country managers added nothing to the overall organi(ation.
Even though Kit Kat was a leading brand in BK, it was ignored outside the country. #n
the early $./<s, 4owntree established 4owntree 7ontinental Europe, which handled
business responsibilities outside the BK in Europe. =owever, this did not benefit Kit Kat,
which was launched in Europe by 4owntree 7ontinental Europe as a multi-local brand...
*&+est&n" Non-'trate"&c Brands
The success of the Kit Kat brand inspired Nestle to thin% and act 'glocally' i.e.
establishing global as well as local brand identity. Nestle had ta%en a similar approach to
several other ac3uired sub-brands.
5oreover, Nestle introduced the Kit Kat brand in several other countries across the globe.
Nestle's brand management strategy included the divestment of non-strategic brands. #n
>ebruary $..., Nestle negotiated the sale of its >indus brand of fro(en food to ECT
&candinavia !?...
E#h&b&ts
Exhibit #D Nestle's 5ain !rands
Exhibit ##D Nestle's 5a9or 5ergers and 0c3uisitions
Exhibit ###D Nestle's >inancial #nformation