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NESTL PHILIPPINES INC IN

PACKAGED FOOD (PHILIPPINES)


Euromonitor International
April 2014

NESTL PHILIPPINES INC IN PACKAGED FOOD (PHILIPPINES)

LIST OF CONTENTS AND TABLES


Strategic Direction ........................................................................................................................ 1
Key Facts ..................................................................................................................................... 1
Summary 1

Nestl Philippines Inc: Key Facts ................................................................. 1

Company Background .................................................................................................................. 1


Production .................................................................................................................................... 2
Competitive Positioning ................................................................................................................ 2
Summary 2

Nestl Philippines Inc: Competitive Position 2013 ....................................... 3

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NESTL PHILIPPINES INC IN PACKAGED FOOD (PHILIPPINES)

NESTL PHILIPPINES INC


STRATEGIC DIRECTION
In recent years Nestl Philippines focused on creating demand through the introduction of
new products geared for adults (in dairy), innovative product variants, new flavours and
increasing consumer awareness of the importance of milk consumption. The strategy of
expanding the consumer base is expected to continue in the medium term, and will be more
prevalent in categories such as dairy, baby food and ice cream, in which the company is a
leader. The companys use of social media to promote its brands will also be an important
strategy which will enable the player to keep up with consumers lifestyles. Nestl
Philippiness main challenge will be stronger competition from aggressive players such as
Unilever Foods Philippines.

KEY FACTS
Summary 1
Nestl Philippines Inc: Key Facts
Full name of company:
Nestl Philippines Inc
Address:

BDO Rockwell, Amorsolo Drive, Makati City


1200, Philippines

Tel:

+63 (2) 898 0001

Fax:

+63 (2) 898 0001

www:

www.nestle.com.ph

Activities:

Manufacturer of packaged food and nonalcoholic drinks

Source:

Euromonitor International from company reports

COMPANY BACKGROUND
Nestl Philippines Inc is the local arm of the multinational Nestl SA. The foreign companys
products were available in the Philippines during 1895, but the formal establishment of a sales
office in the Philippines was not until 1911. The companys operations were suspended during
World War II, but made a post-war comeback with the name Filipro Inc. The main business of
the company was the import of brands such as Milo, Nido powder milk, Milkmaid and
Nescaf. The import restrictions in the Philippines during the 1950s forced Filipro to turn to
the distribution of peanut butter, fruit preserves, fish sauce and napkins.
In the 1960s, Nestl SA forged a partnership with San Miguel Corporation, which led to the
establishment of Nutritional Products Inc (Nutripro), which was engaged in the manufacture of
Nescaf. Filipro Inc and Nutripro merged in 1977 under the name Filipro, which was later
changed to Nestl Philippines Inc in 1986. In the late 1986, Nestl SA purchased all the
shares of San Miguel Corporation, making Nestl Philippines Inc a wholly-owned subsidiary.
Nestl Philippines is one of the largest producers of food and beverages in the Philippines,
both in retail and foodservice. The companys brands in beverages include Milo, Nestea and
Nescaf. In packaged food, Nestl Philippiness brands include: Clusters, Cookie Crisp, Corn
Flakes, Fitnesse, Honey Stars, Koko Crunch, Koko Crunch Duo and Snowflakes in breakfast

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NESTL PHILIPPINES INC IN PACKAGED FOOD (PHILIPPINES)

cereals; Nestl Fruit Selection and Nestl Acti-V in yoghurt; Babyruth, Buttefinger, Foxs, Kit
Kat and Polo in confectionery; Bear Brand, Coffee-mate, Nestl Fresh, Nestl Cream and
Nido in dairy; Maggi in sauces, dressings and condiments; Nestl in ice cream; and Cerelac
and Gerber in baby food. Aside from food and beverages, Nestl Philippines also has
interests in pet care and healthcare nutrition.
The company continues to respond to emerging consumer needs through the introduction of
innovative products. Its thrust of tapping into more discriminating buyers is apparent in its
inclusion of new ice cream brands such as Nestl Temptations and Nestl Crunch. The
manufacturer is also keen on catering to the working population, through the launch of the
brand Milo R2 and the Kit Kat Break Campaign. Nestl Philippines is also very aggressive in
educating consumers through its promotional campaigns.
The company enjoys national distribution of its products through its strategic alliances with
distributors and modern and traditional grocery retailers. Its brands are retailed through
hypermarkets, supermarkets, convenience stores, independent small grocers, convenience
stores and sari-sari stores.
Noting the increasing prominence of social media amongst local consumers, Nestl
Philippiness brands have established their own fan pages on social networking sites such as
Facebook and Twitter. A social media presence ensures these brands directly connect with
their target markets and establish brand image and loyalty through relevant posts and
discussions. Nestls fan pages also offer exclusive promotions for online fans, which
stimulates consumers interest.
Aside from social networking sites, Nestl Philippines has also been active in using bloggers
to be brand advocates. Recognising the influence of bloggers on netizens, the company
invites them to press releases and product launches. In 2012, Nestl Philippines designed a
promotional campaign exclusively by bloggers. Called 10 Funtacular Ways of Eating Nestl
Crunch, this campaign featured 10 of Manilas most popular bloggers endorsing the newly
launched Nestl Crunch.

PRODUCTION
Nestl Philippines has manufacturing facilities in Cabuyao (Laguna), Cagayan de Oro, Lipa
(Batangas), Pulilan (Bulacan) and Tanauan (Batangas). In 2012 the company also opened its
Tanauan (Batangas) plant, which produces Coffee-mate and can also be used to manufacture
Bear Brand powder milk.
In 2001, the company spearheaded the ASEAN Industrial Joint Venture, which is a regional
complementation programme that allows it to supply neighbouring countries. Today, its
production plants in Cabuyao (Laguna), Cagayan de Oro and Lipa (Batangas) are supply
centres which provide Nestl products to ASEAN countries.

COMPETITIVE POSITIONING
Nestl Philippines is the largest packaged food manufacturer in the Philippines, accounting for
a 10% value share in 2012. The companys lead is sustained by its strong positions in snack
bars, ice cream and dairy. Meanwhile, Nestl Philippines is also a reputable player in baby
food and meal replacement.
The success of the company is largely attributable to its long-standing presence in the local
market, which allowed it to build strong brand equity and a good following amongst loyal
consumers. Nestl products such as Milo, Nescaf, Bear Brand, Nido and Nestl, amongst
others, have become household names. The company also benefits from its aggressive

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marketing campaigns, which stimulate demand, as well as ensuring top-of-mind awareness.


The companys expansion of its product line also enables it to tap into key niches, keeps its
brand exciting, and responds to emerging consumer demand.
Nestl Philippiness share in 2012 slightly declined from 2011. This contraction was due to its
weaker position in key categories such as dairy, meal replacement, ice cream and sauces,
dressings and condiments. Stronger competition from other players put pressure on its brands
during 2012. It is expected that the companys share will continue to decline slightly in 2013.
The company is an innovator, and has been constantly focused on launching innovative
products which cater to new niches or expand the consumer base. In 2012 Nestl Philippines
introduced the first flavoured coffee whitener in the country under the brand Coffee-mate
creamy caramel, as well as new flavours for its Nido Fortified powder milk brand. The
company was also able to establish Nestl Acti-V as a yoghurt brand for women. Noting
Filipinos faster-paced lifestyles, Nestl Philippines found a way to enable consumers to cook
rice and other dishes together through Maggi Magic Meals. In 2013, the company also
launched Kit Kat Chunky and Nestl Flavours Temptations of the World, which are both
geared towards middle-income young professionals.
Deriving its share from a wide range of categories, Nestl Philippiness strategy is designed to
maintain its lead in the packaged food market. The company is very interested in maintaining
its lead in larger categories in which it has numerous brands and variants, including hot
drinks, dairy, ice cream and baby food.
Nestl Philippines is positioned in key categories which have strong growth potential.
Although ice cream, dairy and baby food are already large categories, the consumption of
these products is expected to remain vibrant in the medium term, driven by population growth
and spending amongst middle-income consumers. Health-consciousness will also stimulate
demand for products such as powder milk and yoghurt. Nestl Philippiness focus on the adult
demographic is expected to come to fruition in the medium term.
Most of the companys products are mid-priced; lower than premium brands but slightly higher
than local economy brands. Although Nestl Philippines has carved niches in categories such
as ice cream and dairy, its prices remain affordable to most middle-income consumers.
Smaller packaging is also available for consumers with lower disposable incomes, and for
those who buy from sari-sari stores.
Summary 2
Product type

Nestl Philippines Inc: Competitive Position 2013


Retail value share
Rank

Packaged food

9.8%

Snack bars

52%

Ice cream

32.9%

Sauces, dressings, and


condiments

2.3%

10

Dairy

40.9%

Baby food

25.4%

Bakery

1.4%

11

Meal replacement

7.6%

Confectionery

3.0%

10

Source:

Euromonitor International from company reports, company research, trade press, trade sources, trade
interviews

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NESTL PHILIPPINES INC IN PACKAGED FOOD (PHILIPPINES)

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