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Project Report
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NESTLE MILKPAK
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Table of Contents
Executive Summary 4
NESTLE 5
HISTORY OF NESTLE 5
COMPANY VISION 5
COMPANY MISSION 5
PRODUCTS 6
NESTLE IN PAKISTAN 6
NESTLE MILKPAK 6
COMPETITORS 7
Competitive Advantage 7
Demographics of Pakistan 8
Strenghts 13
Weaknesses 13
Opportunities………………………………………………………………………13
Threats………………………………………………………………………………13
· Geographic Segmentation 18
· Demographic Segmentation 18
Targeting 18
Situation Analysis 18
Awareness: 18
Market Trends 20
Market Potential 20
Strengths 20
WEAKNESSES 21
OPPORTUNITIES 21
THREATS 21
Positioning Strategy 22
Differentiation 22
Marketing Mix 22
PRODUCT 22
PRICE 22
PLACEMENT 23
Distribution Channels 23
PROMOTION 23
Marketing Strategy 23
Recommendations 23
BIBLIOGRAPHY 24
Executive Summary
Pakistan is an agricultural country. According to Ministry of Food, Agriculture and
livestock, agriculture accounts for 20.9 percent of the GDP. Dairy industry contributes
49% to the agriculture value and 11% to the GDP. Annual production of milk is 35.25
Billion liters in the country; But the Processed milk is only 4% of the total production.
Like other countries Dairy is not a dedicated profession of the people, farmers is
associated with dairy and agriculture at the same time, Profitability for the farmers is
very less. Infrastructure is not developed, cooling tanks and other facilities are not
available, and the large part of milk production is wasted. There is a multi-hierarchal
distribution system of the milk; the farmers are not getting reward of their work. All
these factors are making this industry unattractive for the farmers and the industry is
no developing up to the mark.
Only 4% of the total milk production is processed and used in urban areas of the
country. According to Pakistan Dairy Development Authority
Only 0.52 Billion liters UHT and 0.5 Billion liters pasteurized
milk is available in the country.
In urban areas people are more health and quality conscious,
the income level of urban population is also good so this segment
has potential for UHT and Pasteurized milk.
Nestle is the world largest food company and nestle MilkPak is Nestlé’s famous UHT
milk brand. Nestle Milkpak has south Asia’s biggest Plant at Kabirwala. It is targeting
upper and middle class. It is differentiating its brand by adding Iron and Vitamin “C”.
The Nestle MilkPak is following growth strategy. The immense competition is going
in the market; it is recommended that Nestle Milkpak should invest more in milk
business and other value added milk products. In this way Nestle Milkpak can fulfill
the local demand by locally processed milk and milk products instead of the imported
milk products. Nestle has brand recognition throughout the world and they can export
milk powder and other value added products in future.
Nestle
History Of Nestle
In 1890, Vevey factory produced 28 billion cans of Milk food and 2.2
million cans of condensed Milk.
In 1912, Nestle begins it long relationship with South Asia when
Nestle condensed Milk company start.
Company Vision
Company Mission
At Nestle, we believe that research can help us to make better food, so
that people live a better life.
Products
• Bottled water
• Baby food
• Dairy products
• Breakfast cereals
• Nutrition
• Prepared food
Nestle In Pakistan
Nestle have been serving Pakistani consumers since 1988 when the
parent company’ Switzerland based’ on Nestle first acquired share in
Milkpak.
1n 1992, Nestle took over the running of company (Kabirwala plant)
and began to develop its Milk collection network.
Nestle Milkpak
Calcium
Protein
Phosphorous
Vitamin A
Competitors
Haleeb Milk
Olpers milk
Good Milk
Competitive Advantage
Demographics of Pakistan
Age Structure
Male: 60%
Female: 40%
Cities Population
Karachi 15 Million
Lahore 9 Million
Rawalpindi 3 Million
43.4 percent of the total work force is from agriculture sector and it is the main source of livelihood for 66 percent of the
country’s population living in rural areas.
Growth in the agriculture sector registered a sharp recovery in 2006-07 and grew by 5%.
Contribution of the livestock sector to Pakistan’s GDP is at 11% while the processed milk sector contributes about 0.43 per
cent.
Agriculture sector.
180000000
Total Target Market Of Milk
Annual Production Of Milk
Year
(Million liters) (Million liters)
2007-08 33805.10 557.72
Years
(million liters) (million liters)
2008-09 35495.25 36361.25
Year
(million liters) (million liters)
2008-09 648.43 353.71
Our projections show increasing deficits in fresh milk production and increasing surpluses in UHT milk market in the run up to 2009-10, which
suggests that the industry should get ready to face challenges.
The analysis shows that Pakistan’s milk yields are very low, and even simple management of feed (proper timing, proper mix and so on) can increase
yield substantially. This requires intervention at two levels:
a) The farmers need to have better knowledge of feed management. This can be done by involving milk plants and provincial livestock
departments who can provide training and extension services to dairy farmers.
b) The feed industry needs to be developed substantially to provide better quality animal feed at affordable prices. Currently we do not
have sufficient supply of high quality nutrients and additives, especially in rural areas. A specific package needs to be developed with the
help of the government and in partnership with the private sector that would facilitate and encourage the development of a modern feed
industry. Further, the vast potential of using molasses as concentrate in animal feed also need to be taped.
Dairy Farmer
Gawala (Milkman)
Retailer
Milk Collector
Distributor/Retailer
Milk Processing Plant
Milk Collection Agency
Customer
Pakistan Dairy Industry is Cheaper than Austrai, America and other deveolped countries.
Weaknesses:
Lack of education among the farmers is making it difficult to change farm and dairy management systems.
Veterinarians.
Despite the huge volume of milk produced in Pakistan, processors find it hard to procure sufficient milk to meet future
consumer demand.
Production of milk falls to 55% of peak production at its lowest point in mid-June.
The demand increases 60% during June compared to December when the milk supply is ample.
Opportunities:
There is an opportunity for companies to introduce value-added products like shrikhand, ice creams,paneer, khoya, flavored
There is a phenomenal scope for innovations in product development, packaging and presentation.
Threats:
Very low quality milk is provided by the milkmen to dairy farms which is a very big threat for the entire market.
The shortage of milk providing animals is also a threat for entire milk industry.
Consumer
Gawala (Milkman)
De-creamer
Milk Collector
Dairy Farmer
Retailer
Strenghths:
Demand profile:
Absolutely optimistic
Margins:
Tremendous with balancing equipment, you can keep on adding to your product line.
Presently, more than 80 per cent of milk produced is flowing into the unorganized sector, which requires proper
channelization.
Technical manpower:
Weaknesses:
Perishability:
Pasteurization has overcome this weakness partially. UHT gives milk long life. Surely, many new processes will follow to
improve milk quality and extend its shelf life.
Theoretically, there is little control over milk yield. However, increased awareness of developments like embryo
transplant, artificial insemination and properly managed animal husbandry practices, coupled with higher income to rural milk
producers should automatically lead to improvement in milk yields.
Logistics of procurement:
Woes of bad roads and inadequate transportation facility make milk procurement problematic. But with the overall economic
improvement in India, these problems would also get solved.
Problematic distribution:
Yes, all is not well with distribution. But then if ice creams can be sold virtually at every nook and corner, why can’t we sell
other dairy products too? Moreover, it is only a matter of time before we see the emergence of a cold chain linking the
producer to the refrigerator at the consumer’s home!
Competition:
With so many newcomers entering this industry, competition is becoming tougher day by day. But then competition has to be
faced as a ground reality. The market is large enough for many to carve out their niche.
Opportunities:
"Failure is never final, and success never ending”. Dr Kurien bears out this statement perfectly. He entered the industry when
there were only threats. He met failure head-on, and now he clearly is an example of ‘never ending successes! If dairy
entrepreneurs are looking for opportunities in India, the following areas must be tapped:
Value addition:
There is a phenomenal scope for innovations in product development, packaging and presentation.
o Steps should be taken to introduce value-added products like shrikhand, ice creams,paneer, khoa,
flavored milk, dairy sweets, etc. This will lead to a greater presence and flexibility in the market place
along with opportunities in the field of brand building.
o Addition of cultured products like yoghurt and cheese lend further strength - both in terms of
o A lateral view opens up opportunities in milk proteins through casein, and other dietary proteins,
o Yet another aspect can be the addition of infant foods, geriatric foods and nutritional.
Export potential:
Efforts to exploit export potential are already on. Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East.
Following the new GATT treaty, opportunities will increase tremendously for the export of agri-products in general and dairy
products in particular.
Threats:
Today milk vendors are occupying the pride of place in the industry. Organized dissemination of information about the harm
that they are doing to producers and consumers should see a steady decline in their importance.
The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far outweigh ‘weaknesses’ and ‘threats’.
Strengths and opportunities are fundamental and weaknesses and threats are transitory. Any investment idea can do well only
when you have three essential ingredients: entrepreneurship (the ability to take risks), innovative approach (in product lines
The Indian dairy industry, following its deli censing, has been attracting a large number of entrepreneurs. Their success in
dairying depends on factors such as an efficient yet economical procurement network, hygienic and cost-effective processing
facilities and innovativeness in the market place.
All that needs to be done is: to innovate, convert products into commercially exploitable ideas. All the time keep reminding
yourself: Benjamin Franklin discovered electricity, but it was the man who invented the meter that really made the money.
Geographic Segmentation:
Milkpak has segmented the market on the basis of Geographic segmentation and its target market is major populated cities of
pakistan
Demographic Segmentation:
Nestle Milkpak is also segementing the market on the basis of Income level of the people. Three Income level has been
defined; Higher, middle and lower income classes.
Targeting
Situation Analysis
Awareness:
Due to strong brand positioning and effective advertising, Milkpak has highest awareness level.
Milkpak 43
Haleeb 38
Olpers 9
Dairy Queen 7
Good Milk 2
Nurpur 1
Good Milk 1
Milk Pak 45
Dairy Queen 9
Haleeb 22
Olpers 17
Nur Pur 4
Others 2
The table shows that Milkpak has the highest market share due to its consistent quality.
Market Trends
• People are getting more quality and health conscious with the passage of time
• Due to impurities of Gawala milk, people are attracting towards processed milk
Market Potential
• Consumer often prefer branded food items for both quality and status reasons
• Per capita real GDP has increased at an average of 5.6 % per annum during the last three years
• This increase has led to a rise in average income of people and an increase in consumer spending.
Strengths:
Nestle has been serving the Pakistani consumers since 1988, and it has built a strong brand image due to its quality products.
Quality product:
Nestle Milkpak is known as the best UHT milk in Pakistan due to consistency in quality.
Nestle Milkpak’s annual turnover is Rs.30 Billion which provides it a financial edge over its competitors.
Nestle collects Milk directly form the farmers instead of relying on the contractors. And it distribution is also very strong. In
this way it has a complete control over its supply chain.
Weaknesses:
The target market of Nestle Milkpak is upper middle and high class because lower middle and poor class cannot afford to buy
UHT milk due to its premium price. This is the only weakness of Milkpak.
Opportunities:
The projected values of UHT Milk consumption and production are obtained from the ARIMA model.
• More people are coming towards processed milk because loose milk is dangerous for health due to a lot of contamination.
• Growth of processed milk is increasing with 20% annually so Nestle Milkpak has the opportunity to capture a large share of
market.
Threats:
• Two main competitors Haleeb and Olpers are main threat for Milkpak especially the Olpers is growing very fast.
• Inflation is getting higher and higher so the purchasing power of the people is decreasing day by day.
• There is no entry barrier for new entrants as the Olpers has come in the market.
Positioning Strategy
• Functional Positioning
“Jaan Banaoo”
Differentiation
Marketing Mix
Product:
• Quality Product
Nestle Milkpak has the largest market share due to its consistent quality.
• Product Lifecycle
Nestle Milkpak has been in the market for a very ling time and it is at maturity stage.
Price:
Milkpak is holding a large share in the market due to its quality at same price as compared to competitors.
Placement:
Distribution Channels:
Milkpak is not sold directly to consumers and the complete distribution process is followed. It uses indirect channels for distribution like:
ManufacturerDistributorWholesalerRetailerConsumer
Promotion:
Promotion Mix
• Advertisement
• Public relations
Marketing Strategy
Nestle is pursing growth strategy. They have invested $ 70 billion at Kabirwala Plant and they are planning to invest $ 381 billion in the milk
business.
Recommendations
The immense competition is going in the market so Nestle Milkpak should penetrate more and more
in the market.
Only 4 % milk is being processed and 96% people are using loose milk so Nestle Milkpak has the
opportunity to capture a large share of the market through more creative advertising and other
promotional activities.
Nestle Milkpak should invest more on research and development because customers using loose
milk are getting a lot of contaminations especially in urban areas so Nestle Milkpak can provide
Bibliography
Mr. Mustafa Zaidi: Joint Director Research and Development, Lahore Chamber of Commerce.
Dairy reports:
Websites:
http://www.google.com
http://www.wikipedia.com