Case Study

. In the mid-1860s, Henri Nestle experimented

with various combinations of cow's milk, 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.

In 1867, his formula saved the life of a prematurely

born infant. Later that year, production of the
formula, named Farine Lactee Nestle, began in
Vevey, and the Nestle Company was formed. Henri
wanted to develop his own brands and decided to
avoid the easier route of becoming a private label.
He also wanted to make his company a global
company.Within a few months of establishing his
company, Henri began to sell his products in many
European countries. In the initial years, Henri
restructured the organization to facilitate research,
improve product quality, and develop new
products.

In mid-1988, Nestle, acquired Rowntree Mackintosh

PLC. Rowntree was the world's fourth largest
manufacturer of chocolates and confectionery
products, with well-known brands like Kit Kat, After
Eight, Smarties and Rolo. The deal attracted
considerable attention all over the world since
several bids to acquire Rowntree were rejected.
Rowntree claimed that the bids were too low for its
valuable, well-recognized brands.In the end,
Rowntree was acquired by Nestle for £2.5 billion,
two and a half times the pre-bid price and eight
times the net asset value of the company. This
acquisition made Nestle the largest chocolate
manufacturer in the world.
After acquireing Rowntree's brands , the major
challenge before Nestle was managing them.
Rowntree had a "one product, one brand" policy.
The brands Kit Kat, After Eights, Smarties and Rolo
were marketed with no mention of Rowntree. The
brands of Rowntree were not strongly managed
European brands. Before the 1980s, ‘country
managers' outside the UK in several European
countries managed Rowntree's business. They were
free to run their units provided business objectives
were met. The orientation at Rowntree was short-
term just to meet annual business objectives and
country managers added nothing to the overall
organization.
KIT KAT® first appeared on television in 1957 with
the theme 'Have a break - have a KIT KAT®'. The
campaign proved so popular that sales increased by
25%. In 1963 the first KIT KAT® multipack was
produced and after only five years the bargain six
pack of two-finger KIT KAT® accounted for over 20%
of total sales.Sales increased dramatically in the
early seventies following huge investment in new
plant and equipment by Rowntree.
Even though Kit Kat was a leading brand in UK, it
was ignored outside the country. In the early 1980s,
Rowntree established Rowntree Continental
Europe, which handled business responsibilities
outside the UK in Europe. However, this did not
benefit Kit Kat, which was launched in Europe by
Rowntree Continental Europe as a multi-local
brand...
The extraordinary success of Nestlé KIT KAT®
CHUNKY shows that skilful leveraging of the right
brand in the right format can deliver explosive
growth. First launched in the UK and Ireland in
1999, KIT KAT® CHUNKY is now sold in Continental
Europe, Australia, South Africa, Japan, Canada,
Middle East and many other countries around the
world.
The success of the Kit Kat brand inspired Nestle to
think and act ‘glocally'. i.e. establishing global as
well as local brand identity. Nestle had taken a
similar approach to several other acquired sub-
brands.Moreover, 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. In February
1999, Nestle negotiated the sale of its Findus brand
of frozen food to EQT Scandinavia BV...
Other pack formats are KIT KAT® Kingsize, Snacksize,
Mini, Sticks and Petit (Japan). In addition to
standard milk chocolate there are flavour variants
(orange, mint, pineapple) dark chocolate and the
most recent extension; white chocolate.
The product is Nestle's biggest chocolate
confectionery brand and together with the success
of the product in the USA, manufactured under
license by Hershey, makes KIT KAT® the second
largest selling chocolate brand in the world.

For the first time in Asia, Nestlé is introducing its

finest range of premium chocolates – Nestlé
Gold. Nestlé Gold - the very best chocolates from
Nestlé, is now available to the most discerning
chocolate connoisseurs and lovers in Singapore.
 
Designed to bring intense pleasure and gratification
to chocolate connoisseurs and lovers, the new
Nestlé Gold collection is crafted by some of the
world’s best chocolate confiseurs amid the Alpine
foothills of Broc Switzerland where Nestlé has been
making fine chocolates since 1898. To ensure the
very best quality for the Nestlé Gold collection,
Nestlé’s top chocolatiers hand-select only the finest
raw ingredients from around the world and skillfully
apply their best new recipes in its creation. This
dedication to excellence has produced one of the
most elegantly structured and intensely flavoured
dark, and smoothest milk chocolates available
In the light of aforesaid case study, please discuss
the following issues: