Analysis Of Nestlé Company: History, Growth, Sustainability, Changing Market Impacts

Mission/Purpose

“Nestlé's purpose is enhancing quality of life and contributing to a healthier future. We want to help shape a better and healthier world. We also want to inspire people to live healthier lives. This is how we contribute to society while ensuring the long-term success of our company”.

History

Nestle’s journey to becoming a global conglomerate starts in 1866. The Anglo-Swiss Condensed Milk Company was founded during this year and eventually merged with Henri Nestlé, this occurred after his breakthrough in infant food in 1867. The two merged in 1905 and became what is now known as the Nestlé group. The breakthrough that Henri Nestlé made was he launched “farine lactee” which is cow milk mixed with flour and sugar for infants that cannot breastfeed. This breakthrough was an attempt to reduce mortality rates. The timing for this to happen was perfect, international trade of consumer goods was booming. In 1905 Nestlé had more than 20 factories which spanned through Africa, Latin America, Asia, and Australia. The first big challenge Nestlé had to overcome was the outbreak of World War I. During the war there was an increase in demand for condensed milk. This caused issues in trade due to border problems which eventually lead Nestlé group to acquire a total of 40 processing facilities throughout America and Australia. After the war as expected the demand for canned milk decreased causing troubling times for Nestlé. The company shortly solves this problem but quickly gets hit again by the stock market crash of 1929. Even though Nestlé faced problems many problems during 1918-1938 they had major developments such as Nescafe coffee which is launched.

Soon after World War I affected the whole world, World War II began in 1939. This war again affected all the markets and forced Nestlé to cater to the armed forces and civilians powering through this difficult time. The period after the second World War 1948-1959 was full of new opportunities and positive times for Nestlé and for consumers. Things began to shift towards a more convenience food based consumer preference. Almost a decade after this catastrophic event in history, nestle launched Maggi soups and seasons and Nesquik. Nestlé was growing at an unprecedented rate and began to expand even more during 1960-1980. Nestlé began to acquire different companies in fields such as frozen foods, pharmaceuticals, and cosmetics which let them enter fast growing markets. Nestlé oversees the profits and growth meticulously as the continue to grow and eventually began to get rid of brands that are not profitable for them anymore throughout 1981-2005. In addition to this they began to focus on nutrition and health more. They began to expand more to the US, Eastern Europe and Asia as well as attempting to be a leader in animal food, water, and ice cream. In more recent time Nestlé has started to use its “Creating Shared Value” business approach. This is in order to further develop their supply chain in cocoa and coffee for Nescafe and Nestlé cocoa. They also continued to reinforce their current position in more traditional areas such as, frozen foods, medical nutrition, and infant formula.

Growth

Nestlé officially began in 1905 and since then the wheels haven't stopped turning; they continue to expand and develop to this day 113 years later. In more recent times Nestlé has slowed down in their growth and according to Naomi Rovnick of the Financial Times, it is the slowest growth they had in two decades. This can be seen to be evident when analyzing their global sales from 2005-2017. This can also be seen when looking at the amount of employee’s and stock price in recent times. The new CEO of Nestlé, Ulf Mark Schneider, is looking to change this and increase the growth again by looking to reshape their portfolio and invest in higher growth companies and areas of the market.

Efforts by Nestle to make social and environmental impact

Over the years, Nestle has sought for the company to be successful in the long term and they plan to achieve this by creating customer value not only for the shareholders but for society and the planet as a whole. This approach to build their core business values and idea is called Creating Shared Value (CSV). Their ultimate social and environmental goal is to have a positive impact by “enabling healthier and happier lives for individuals, helping the development of thriving and resilient communities, and finally, on stewarding the planet’s natural resources for future generations, with particular care for water. ”

The focus areas inside this Creating Shared Value approach are the following: individuals and families (committed to healthy kids), our communities (supporting youth), and the planet as a whole (driving water stewardship). Inside of each focus area there are more specific areas of impact. The area of individuals and families consists of: offering tastier and healthier choices, inspiring people to lead healthier lives, and building, sharing, and applying nutrition knowledge. The area of communities consists of: enhancing rural development and livelihoods, respecting and promoting human rights, and promoting fair employment and diversity. The area for the planet as whole consists of: caring for water, acting on climate change, and safeguarding the environment.

As stated on their website, most of their efforts have been “reframed and feature objectives to 2020. These commitments will, in turn, enable us to meet our ambitions for 2030 in line with the timescale of the Sustainable Development Goals (SDGs). ” Nestle has shaped its purpose and outlined their business values in order to math with those of the United Nations 17 Sustainable Development Goals, which are goals that are set to transform the world by 2030. Nestle has hundreds of initiatives to impact the environment and society where Creating Shared Value is their biggest one but they have many others that are also crucial for the company and the planet as a whole. Some of these other initiatives are: 27. 8% reduction of water withdrawal per ton of product since 2010, 578 water saving initiatives implemented in production sites in 2017, 144 million gallons of water saved in the California facilities through water efficiency projects, Manos al Agua program which empowers Colombian coffee makers to develop solutions for water management and climate change. Nestle also sources 90% of all cocoa materials produced in the U. S to be UTZ Certified (sustainable farming), 60% of all U. S factories are landfill free, finally they have been reducing the weight of the packages since 1991 reducing 500 million kg to date while also using, wherever possible, recyclable material that has lower environmental impact. Finally, Nestle’s social impact is that they provide safe drinking water during natural disasters and they have reformulated 1830 products to consider nutrition benefits.

Changing Marketing Impacts on Nestle

Demographic: A new generation of consumers offering products that provide clean recipes made from natural ingredients that are traceable and authentic. Millenials are the growing concern in the market. Millenials want to feel a deeper connection to their products. They are focused on products that are high quality and fits their personality. This specifically pertains to Nestle because a large portion of their market is Millenials and they have to adapt their products to their preferences. There has been a growing trend in “bodybuilding” and working out. Nestle has expressed interest in high protein products. They began marketing a fitness granola type product to cope.

Social: Video Content Creation is the most significant trend in marketing. Social media is being used by millions of people every day. Nestle has adapted by creating social media pages on Instagram, twitter, and facebook. They use these platforms to promote to their primary market, millenials. Understanding your consumer and finding the most effective way to communicate with them. Customers have different preferences in how they want to be communicated to such as social media, television, computer ads, texts, and a multitude of others. Nestle must understand communication and how they can effectively reach their target market in the most effective way possible. to be Nestle also has the Nestle Healthy Kids Global Programme that works in partnership with NGOs is to raise nutrition, health and wellness awareness of school-age children around the world. It provides nutrition knowledge to parents for the child. The findings from large-scale research projects, such as the Feeding Infants and Toddlers Studies (FITS) and the Kids Nutrition and Health Studies (KNHS), help define Nestle’s product developments, consumer communication and educational programmes, and inform dialogue with the scientific and medical communities.

Environmental: Nestle pledged to increase the amount of recycled plastics it uses in some parts of its packaging in the EU. The company has promised that by 2025 bottles, PET layer in laminates, caps on glass jars and tins, trays for meat products and shrink films will all contain between at least 25 per cent and 50 per cent recycled material, depending on their packaging type.

Cultural: Trends are moving towards a demand for healthy and nutritious alternatives. The food and beverage industry is being redefined by health and clean label trends.

Nestle has looked into these circumstances and is attempting to reduce sugar and sugar alternative. Some of their goals includes selling smaller portions and all-natural flavors. Nestle needs to continually develop a new strategy to adapt and expand production of low and non-fat products. Consumers are beginning to put their trust into products that they know and are reputable instead of just relying on ads. Nestle has a somewhat strong reputation considering that they have been around for almost 200 years. With the option of adblock, Nestle has to create ads that are appealing but keeps the mission of clean, healthy food at the forefront to appeal to consumers. The changing trend in more creativity is growing. Consumers are looking for marketing strategies that are fresh and creative. Nestle must adapt by being a leader in creating new campaigns and taking risks. These changes will help continue the success that Nestle has already had.

Economic: Nestle products are generally considered high quality products. Consumers are willing to pay a little more for a Nestle products. The catch is that Nestle doesn’t offer their products at high prices. They stick to their mission of producing healthy, tasty, nutritious food, and offer them at reasonable prices. This mission is why consumers have been buying Nestle products. Foods and beverages that are “naturally good for you” are growing at 3% annually.

Technological: Nestle invests a lot into research and claims that they can make products taste the same but contain less sugar. Technological advances in how sugar is implemented and used is a key concept that Nestle has been researching and hoping to include in their products in the future. Work is being done to reduce total sugar by up to 40% in their products.

Data-Driven Marketing Decisions Will dominate the market: Marketing will be focused on utilizing facts and evidence to drive revenue and growth. Nestle has to adapt to the facts gathered from primary and secondary to better understand the consumer. This will help drive personalization and digital experimentation, thereby ensuring outcomes that optimize the customer experience. Customer Data Infrastructure: Consumers now interact with businesses in a multitude of ways. Customer driven marketing is becoming very accessible because of technological advances. Nestle must adapt to this new marketing strategy and use the customer driven information to change their products and prices to a reasonable solution for the business and consumer.