Case Study NESLE

8/7/2019 Case Study NESLE

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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 whowere 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 inVevey, 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 hiscompany, Henri began to sell his products in many

European countries. In the initial years, Henri

restructured the organization to facilitate research,


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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.


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The brands Kit Kat, After Eights, Smarties and Rolo

were marketed with no mention of Rowntree. The

brands of Rowntree were not strongly managedEuropean 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.


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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-localbrand...

The extraordinary success ofNestl 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


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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, Nestl is introducing its

finest range of premium chocolates Nestl


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Gold. Nestl Gold - the very best chocolates from

Nestl, 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

Nestl Gold collection is crafted by some of the

worlds best chocolate confiseurs amid the Alpinefoothills of Broc Switzerland where Nestl has been

making fine chocolates since 1898. To ensure the

very best quality for the Nestl Gold collection,

Nestls top chocolatiers hand-select only the finest

raw ingredients from around the world and skillfullyapply 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


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In the light of aforesaid case study, please discuss

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Case Study NESLE