Are You suprised ?
INDEXCHAPTER 1
OJECTIVE
RESEARCH METHODOGYCHAPTER 2
INTRODUCTION
COMPANY PROFILE
CHAPTER 3
ANALYSIS OF DATA
PRODUCTS
CHAPTER 4
CONCLUSION
LIMITATIONS
BIBLOGRAPHY
ANNEXURE
EXECUTIVE SUMMARYThe current millennium has unfolded new
business rules most the significant of them being that company has
to constantly look into minds of the customer. Customer loyalty
plays a significant role and today securing that loyalty requires
quality right price and of course last but not the least i.e.
creating awareness about their service. As a trainee, I was given
knowledge about the way and style of their working, their routine
and their environment. It was a great experience in getting under
such a reputed company, which has in it the ability to retain
customer.
OBJECTIVE
To identify the services and products offered by NESTLE.
To study and analyze the customer perception and preference
about NESTLE.
Finally to draw the various conclusion and recommendation on the
on the basis of study conducted.
RESEARCH METHODOLOGY
Managers need information in order to introduce products and
services that create value in the mind of the customer. But the
perception of value is a subjective one, and what customers value
this year may be quite different from what they value next year. As
such, the attributes that create value cannot simply be deduced
from common knowledge. Rather, data (information) must be collected
and analyzed. The goal of Marketing Research (analysis) is to
provide the facts and direction that managers need to make their
more important marketing decisions.
The analysis involves the following steps:
Define the problem.
Determine research design.
Identify data types and sources.
Determine sample plan and size.
Collect the data.
Analyze and interpret the data.
Prepare the research report.
For the purpose of study, data from the in-house survey
conducted by the marketing department (secondary data) has been
used and also for coming out with the recommendation. It was also
felt that mere secondary data would not provide in-depth
information for the analysis, hence it was decided that interactive
discussions with the managers and the head of every department
would help in an in-depth and true understanding of challenges
faced by the department.
The methodology adopted was to gather relevant information from
the appropriate department, correlate the information obtained and
to present the information in a logical and systematic manner.
INTRODUCTION Nestle India Ltd. is a part of the Nestle SA group
which is one of the largest manufacturing companies in the world.
Henri Nestle founded the company (with its headquarters in Vevey,
Switzerland) in 1867. Nestle has two major divisions - Le Societe
des Produits which looks after the production and marketing and
Nestec Ltd. which provides the technical assistance to the group
companies. Since its inception in 1867, the company has diversified
it product range from the infant weaning formula (which was its
first product) to beverages, confectionery, ice creams and pet
foods among others. In a span of 130 years the company has ranked
26th among the worlds largest corporations and boasts of a turnover
of $ 48932.5 million and employee strength of 221,144 people spread
over 75 countries worldwide (Annexure A).
Nestle has long been viewed as one of the most multinational of
the multinationals. This is because today only 2% of its turnover
comes from Switzerland. Out of the remaining 98%, Europe
contributes 43.5%, North and South America contribute 36.5% and
Africa and the Asia Pacific Regions contribute 18%.
Company Profile Although Nestle has been associated with India
since the beginning of the century through the importing and
trading of infant food and condensed milk, manufacturing in India
only began with the setting up of the factory in Moga in 1962. The
first product to be manufactured was Milkmaid. In the last 35 years
the company has shown rapid progress and has increased its product
range to 80 products as of October 1997. Nestle India Ltd. now
ranks 22nd amongst Indias most valuable companies (Annexure B) .
Its gross revenue has increased from Rs 1001.1 crores to Rs. 1213.8
crores in 1996. This remarkable growth has been achieved through
-
Rapidly creating greater manufacturing capacity, both at
factories as well as with co-packers.
Taking measures to ensure availability and improved quality of
key raw materials - fresh milk in particular.
Strengthening of the sales and distribution network
(particularly in smaller towns)
Ambitious and cohesive manpower training and development
programs for the personnel of the company across all
disciplines.
The companys exports also resulted in a very successful year in
this area as exports grew by 27% to Rs. 250.8 crores in 2003. The
main contributors to this increase were the export of tea and
coffee to USA, Japan, Russia, Hungary and Taiwan.
Nestle India Ltd. wants to further increase its operations in
India and has started construction of its sixth Factory at
Bicholim, Goa for the manufacture of culinary products (a key
thrust area) for this purpose.
The Spirit of Nestle
Organisational excellence is never achieved through a one time
effort; It is always a process of continuousimprovement across a
number of areas of operation.
A key factor for Nestles success has been its quest for
continuous improvement through ushering in greater productivity and
more efficiency in everyday operations. Despite the infrastructure
impediments in India, Nestle has set itself high standards of
business performance. This is reflected through the essence of the
company - its mission statement.
Nestles mission
To be in every way the leading company in the Indian food
industry and a good corporate citizen by providing our consumers
with superior quality products, our shareholders with rapid growth
& fair returns and our employees with a challenging and
satisfying work environment.
To translate this spirit into a planned and measurable process,
Nestle has set up key objectives across all divisions.
Key ObjectivesProduction To optimise production costs while
enhancing product quality so as to make Nestle products even more
competitive in the market place.
Sales and marketing To reach a sales turnover of 3000 crores by
the year 2003
To double the turnover every three years
People
To help employees to retain a long term perspective and
integrate them fully with the companys business goals
To retain a broad perspective while addressing individual
needs
To view growth as a continuous process
To concentrate on attitudinal changes by developing leadership
skills, an appreciation of interdependence between units and the
enhancement of a sense of belonging to Nestle.
Finance
To maintain profit levels above the average for the food
industry in India.
The Business Excellence and Common Application (BECA) initiative
essentially translates the spirit of the Journey towards excellence
into an organised, systematic and measurable approach. The aim is
to aid the achievements of the companys key objectives of rapid
growth by ensuring that all operations incorporate the spirit of
meaningful planning, effective cost control and efficient
implementation. BECA is about planned improvement in everything we
do
Factories
Nestle has 6 factories in India. These are
1. Moga (punjab) : The Nestle factory in Moga has the pride of
being the first and most comprehensive factory of Nestle India. Set
up in 1962, it represents the core competence of Nestle India in
the manufacture of milk products (Everyday, Milkmaid), beverages,
culinary products (Maggi sauces, noodles, soups etc.), weaning
cereals (Cerelac) and infant milk formulae.
2. Choladi ( Tamil Nadu): The factory in Choladi started
production in 1967. Situated about 60 miles from Calicut, the
factory today has 81 employees and produces 1.5% of the total
turnover of Nestle India. It is a 100 percent export oriented unit
which processes freshly picked tea leaves into soluble instant
tea.
3. Nanjagud (Karnataka): Production in this factory began in
1989 with the manufacture of Nestle instant coffee and Sunrise.
Today in addition to instant coffee the factory also manufactures
health beverages. The plant to manufacture MILO was also
commissioned at this factory. This factory employs 145 people and
is cited as a model in terms of environment protection for its
installations to purify waste water as well as for its provisions
for recycling coffee wastes. 4.Samalakha (Haryana): This factory
was set up in 1993. Located 70 kilometres from Delhi , it
manufactures weaning cereals , culinary products ,health beverages
and milk products. Recently the expansion of manufacturing capacity
for Milkmaid Dessert Mixes was undertaken at this factory as this
new and unique product category is viewed to have great potential
in the future.
5.Ponda (Goa): This Kit-Kat factory was set up in Goa in 1995 at
a cost of Rs. 50 crores. It represented a major step by Nestle
towards becoming the Number 1 Chocolates and Confectionery Company
in India.
6.Bicholim (Goa)
The construction work at this new factory is progressing with
speed. This factory will soon commence the manufacture of culinary
products, which is a key thrust area for the company and will
include latest technological improvements relating to this category
of products.
As a part of Nestles efforts towards continuous improvement and
excellence in Manufacturing operation, a Moga Improvement team
(MIT) was put in place at the Moga factory. The team comprised of
international experts from Nestle Technical Services (NESTEC) and
the local staff. In 1996, it embarked on a program with the single
minded objective of optimizing production costs while enhancing the
product quality so as to make Nestle products even more competitive
in the market place. Drawing upon Nestles global experience and
manufacturing expertise in 75 countries the team identified the
following areas for detailed study -
Process improvement to ensure the optimal usage of resources
Improvement of operational efficiency
Cost optimization
A series of small but critically important initiatives ranging
from redesigning laboratories to palletisation of raw materials and
packaging material utilization, manufacturing and filling loses and
labour man hours resulting in substantial savings and improved
productivity and machine utilization. In addition, several non
tangible benefits in the form of systems for sustainable
improvement in areas like factory maintenance planning tools , down
time recording systems and performance measurement tools were also
realized .
This project was highly successful and the company is now
implementing its key learnings of MIT in its other factories.
In a country as vast and diverse as India, supply chain
management is absolutely critical to rapid growth. Through BECA,
Nestle has concentrated heavily on streamlining and improving their
supply chain management in order to make it more dependable, more
cost effective and most importantly, more responsive to market
needs.
For better supply chain integration the planning of key
operations - purchase, production, distribution and sales are
synchronised to ensure that everybody works towards a common
business plan. Monthly objectives are broken down into weekly and
(wherever necessary) into daily plans and monitored regularly to
ensure smooth implementation and quick corrective action when
needed . Major benefits accrued thus far include reduction in
working capital through lower inventories of finished goods and
materials, better stock availability and reduction in obsolescence
of materials.
In addition to traditional performance indicators, quantifiable
performance measures have been identified and implemented in all
functional areas such as sales planning, production output, quality
assurance, material ordering transportation and warehouse
management. These measures are monitored regularly to gauge the
extent of improvement and identify root problems for taking
corrective actions.
Teams have been put in place at all factories and sales offices
to ensure the implementation is continuous and self-sustaining.
Areas of improvement are regularly identified and time bound action
plans established. For this purpose, standard tools such a Total
Quality Management(TQM), Kaizen, 5S and Small Group improvement
activity (SGIA) are being extensively used.
The efficacy of this hierarchical structure is seen in Nestles
performance over past few years of various products.
By 1989 the company had achieved a sales figure of approximately
Rs. 258 crores. 1989 was the year of launches. Seven new product
lines were launched in this year. This was also the year in which
the Nanjagud factory was set up. By the year 1992, this sales
figure was touching Rs 500 crores. In the 1995 the pace of launches
quickened and since the construction of the factory at Samalakha,
20 new products have been introduced. By 2003, Nestle had about 76
different products in its portfolio with various new products in
the pipeline as well. The sales figure now touched Rs. 1214 crores.
Thus sales grew by 450% over a period of one and a half
decades.
Marketing Strategy Nestle has adopted a four pronged growth
strategy: -
1. Gunning the market with new products and brand
extensions.
2. Expansion of the distribution network to small towns for
extensive availability.
3. Reduce prices and introduce smaller packages for products to
make them more affordable (a tool to enter price sensitive
markets).
4. Focus on employ training and develop a positive attitude
through enhanced manpower development.
5. By year 2003 it expects chocolate & confectionery to
account for one in every third rupee in sale.
In the late 1996 fear of breading complacency by not having a
continuous improvement, gave birth to an international sales &
marketing improvement teams (SMIT).
SMIT maps the latest in helping towards the target of year.
2003. The SMIT exercise is a major global initiative of Nestle to
enhance sales & marketing productivity. Linked with the already
existing BECA project, which in turn emphasises on excellence by
improving the distribution set up , this gave rise to the following
growth objectives for the year 2003
Ensure direct coverage of all urban towns in India.
Expand distribution to reach 1 million retail outlets on a
regular basis.
Work in partnership with the distributor for the achievement of
these objectives.
Provide sustainable solution to optimize our secondary sales
from distributor to retailer.
NEW PRODUCT LAUNCHES To put all the product launches into
perspective, Nestle now has 80 products including various flavours
and variants this awesome list of 80 products for most companies is
an overfull palate. Nestle India Ltd. Still have a variety of new
products in the pipelines. It believes in slowly colonizing as much
territory as fast as it can, adapting to native conditions and then
work at holding off the advancing herds. Nestle products can be
broadly classified into 5 main ranges -
Milk Products
Chocolate and Confectionery
Beverages
Culinary
Food service
Milk Products
This category which comprises of condensed milk, baby milk foods
, milk powders , acidified infant food , and other milk products,
showed a slump in 1996 as sale of milk products fell from Rs 31.4
crores in 1995 to Rs 31.2 crores in the said year. Consumer offtake
remained depressed throughout this year as a consequence of high
price increases necessitated by substantial increases(+50%) in the
cost of basic raw materials( fresh milk ) , over the past two years
.
However Nestle retained its leadership in the infant food market
with Cerelac, Lactogen and Nestum and even introduced a new flavour
of Cerelac - Cerelac Rice in 1996.
Chocolates and Confectionery
Nestle pursues the objective of accounting for one in every
three rupees in its sales figures through chocolates and
confectionery. This has thus been one of the thrust areas in
Nestle. Nestle this year widened its range of flavours in POLO,
backed by its tremendous success in the Indian Market by adding
POLO Spearmint to its Portfolio. This new flavour has also received
an encouraging response in the market according to market
analysts.
Milkybar also retained its position as the number one white
chocolate brand in India, however it did not record a significant
increase in sales as a majority of Indian tastes still do not
accept this flavour.
This year however, was a year of tremendous success for Kit Kat
.This internationally renowned brand gained a large increase in the
Market share in the past year and Nestle officials are hopeful that
this will further increase in the coming years. However this Brand
along with it success has brought with it its share of Controversy
as the Union of India has launched a Litigation against the Kit Kat
family pack.
In 1997 Nestle added to its range of confectionery by
introducing SPLASH, A soft hearted, hard boiled sweet this is being
promoted as a sweet unique to India and is positioned to a target
audience in the age group of 4 to 12 years and anyone with a soft
heart is a potential customer. Priced at Rs. 1 for a 7.5 gram candy
splash has been introduced selectively in the South and has been
speculated to repeat Polos performance. Nestles officials claim
that this candy has the potential to grab a quarter of the 700
crores confectionery market.
The most recent of Nestle affairs with the confectionery market
has been the introduction of Mithai Magic which is a little Mithai
, a little magic .This new product was launched in September 1997
,in time for the Diwali purchases of sweets . This brand has been
positioned somewhere between chocolates and traditional sweets and
the company is employing a push strategy to promote this brand.
Beverages
This year has been very successful in the beverages market for
Nestle .The sales of beverages has increased from Rs 323.3 crores
in 2002 to Rs 398.8 crores in 2003.
Nestles Flagship Nescafe which was pegged at Rupees 1040 per
Kilogram before the launch of Tata Cafe, met with stiff competition
from Tata Cafe priced at Rupees 550 per Kg once it was introduced .
Tata cafe claimed to have garnered a market share of 17% by
December 1996. This forced Nestle to cut prices of Nescafe to
Rupees 840 per Kg. However Nescafe still retains 83% market share
in the Rs 177 Crores market for pure instant coffee.
Nestle Sunrise also showed an increase in sales and captured 20
% of the Rs 253 crores market in Mixed instant coffee.
This year Nestle also launched MILO, an internationally renowned
chocolate energy drink, and the response for this has been
encouraging.
Nestle has also introduced Tasters Choice tea bag pitched
against Taj mahal tea bags.
Culinary Products
The market in culinary products had witnessed a high growth
consequent to aggressive pricing decisions on existing products and
the introduction of a variety of new products to match the needs of
the Indian Housewife. Encouraged by this success Nestle launched
Maggi Macoroni Snack in three flavors - Chicken , Masala and
Tomato. Nestle officials say that this would consolidate Maggis
position as the number 1 culinary brand in India. The product
focuses on convenience and innovation as its Unique Selling
Proposition. This snack has opened a new segment for the maggi
brands. The brand is positioned as youthful and is represented by
the twists and curls of the macaroni snack. It is speculated to be
introduced in a phase manner nation-wide to be placed in the 7.5
lakh outlets that Maggi noodles sells in .
In the spirit of catering to Indian tastes Maggi introduced
maggi pickles in five variants benchmarked to give the ghar ka
swad. Maggi Dosa Mix was also introduced to offer superior quality
and added convenience. Apart from this Milkmaid Kalakand Mix, a
traditional north Indian sweet of premium quality was added to the
milkmaid dessert mixes. Maggi soup also launched three new
variants. Maggi Rassam in particular was noticeable as yet another
attempt to make traditional Indian cooking a little bit easier.
Food Service
Food service items basically deal with the out of home segments,
which would include vending machines. Nestles food service business
is poised for rapid expansion to meet the growing need for such a
reliable, time saving and cost effective service in this modern age
.
Nestle wants to sell 500 million cups of tea and coffee through
its vending machines in the year 2003. It currently has 3500
vending machines at assorted locations (both public and private).
In 1995 Nestle food service did well to vend 40 million cups of
Nescafe and Tasters Choice tea. Its 2003 sales were placed at 59
million cups of Nescafe and 36 million cups of tea, this figure was
however way below the expected sales for the year.
Distribution strategy
It is an indisputable fact that fundamentally all consumers
marketing must first assure availability of the product to the
consumer. In India, the urban population alone is of a whooping 250
million consumers -an unbelievable potential for any FMCG . The
potential being spread across more than 4000 towns have to be very
effectively and efficiently tapped. Nestle till now was retailing
in a limited number of towns with only 200 towns accounting for 70
% of their business. For Nestle to be a leader in the food
industry, expanding the distribution network for more retail
outlets was a must.
To meet this challenge, Nestle is working towards an objective
of increasing the retail base to 1,000,000 outlets by the year
2003. This network is feasible as Nestle has a triangular
distribution structure thus the span of control is still retained.
The Distribution Network is explained in figure 2.
In order to achieve these distribution objectives Nestle has
formulated an international sales and marketing improvement team
(SMIT). SMIT focuses on a single objective -provide sustainable
solutions to optimize the distributor and retailer sales through a
step by step approach starting with analysis of market followed by
identification of the probable retail outlets and finally selection
of the same .The team also focuses on proper implementation of
resources and timely follow ups for effective solutions.
Advertising Strategy
Nestle, a cash rich company has plenty of marketing prowess.
This can be credited to a strong and sound advertising
strategy.
Nestle in the year 2002 had an advertisement spending of Rs 43.3
crores (net) . Tracing Nestles advertising responses the ad
campaign by HTA of Hot and Sweet was a runway success this ad was
actually meant to fend off a challenge from H.J Heinz. The Maggi
ranges of sauces were introduced in 1985 but sales didnt catch up
until 1990 but till 2003 it got considerable market share. At this
point the popular and memorable campaign of Javed Jaffrey and
Pankaj Kapoor was launched by Producer Pralad Kakkar . This
commercial was an instant success. The volume of sales kept rising
from an initial growth of 13% to 20% in the next year. Today the
sales figure for Maggi Sauces is growing at a steady 6% per
year.
Another noteworthy campaign was that of POLO (the mint with a
hole), devised by Mudra advertising agency. This campaign was
awarded 11 industry ad awards.
In 2002 the advertisement budget has been approximately Rs 56
crores where again innovation was the main focus. The new
nation-wide product launch of Maggi Macaroni Snack and Mithai Magic
have been designed by Mudra . The Macaroni ad with its use of
English and a catchy beat (which is the latest trend amongst the
Indian Advertisers) appeals well to the target audience and the
Mithai Magic commercial does keep the secret of the contents in the
box , intact.
Training is an integral and indispensable part of Nestle . I
regard the importance of training a highly as research and
development .It is a major investment in the Future of the company
and imperative because it is an investment in people
- Mr. Helmut Maucher
Chairman and CEO Nestle S A Group
Nestle India Ltd. has an employee base of 3040 people and aims
to be in the top quartile of the FMCG companies .For this purpose
it follows a very stern and rigorous recruitment policy .
Recruitment Policy
Recruitment of fresh management trainees and sales officers is
done every April-May. These graduates are generally selected from
the best institutes in the country through a series of interviews.
They are then put through a probation period of 12-18 months.
Although Nestle does not offer some of the highest pay packets in
the industry, it is considered a growth oriented company.
Training and Development
Continuous development of skills and attitudes of employees is
critical to the achievement of excellence. At Nestle therefore
training and development of human resources is viewed as a long
term investment .
If you are planning for one year , Plant wheat;
If you are planning for ten years, plant a tree;
If you are planning for life, train people.
- Old Chinese proverbThis proverb goes with the organizations
most enduring beliefs worldwide -
That long term planning is the key to Nestles global success
That Nestles most valuable assets are its people
Nestles policy is to rely on a more decentralized form of
management by building in the habit to Think Nestle.
At Nestle India training and development is an integral part of
the business plan and strategy in line with the objectives for the
year 2003 and aims to -
Help employees to retain long term perspective and integrate
them fully with the companys business goals
View the growth of both the personnel and the company as a
continuous process .
Concentrate on attitudinal changes by developing leadership
skills, an appreciation of interdependence between units and the
enhancement of a sense of belonging to Nestle .
In 2003 Nestle India benefited greatly from the training program
offered at the Rive Reine International Training Center at Vevey,
Switzerland. This training program helped facilitate the transfer
of common Knowledge (technical, marketing, and finance) across the
Nestle Group and ensure interdisciplinary approach to learning and
uniform progress with a tailor-made approach for all.
Company Training needs -
analysis of training needs of Managers
self development programs for staff at HO
programs for company orientation and information sharing
programs aimed at computer training and computerization
Establishment of contact with leading management institutes with
a view to use the same for meeting local training requirements
Nestles Corporate Culture
As we had discussed before, Nestle is one of the most
multinational of multinationals and is spread over 75 countries
worldwide. This implies that it has employees from diverse cultural
backgrounds. Nestle respects the distinctive culture, mentality and
traditions of every employee in every country. What Nestle aims at
is to incorporate its own culture into its employees without
stifling the individual employees culture and identity. When we
went to Nestle we could feel the existence of a distinctive work
culture amongst the management - the staff seemed highly motivated
& cheerful and everybody had pin up boards in front of their
tables with reminders , motivational messages and even time logs
(the Nestle people seemed as if they availed of the benefits of
time management) .
Nestle has a diverse product range and so it also has
diversified risks Thus Management on Information systems plays a
vital role in Nestle to provide information to the Sales and
Marketing as well a the finance department .The Electronic Data
Processing Department looks after Management Information Systems
.
Apart from this, Nestle has a vast distribution network. In
order to support the BECA process, an integrated computer system
has been put in place across the company to link all functional
areas and locations. This common linked system will improve
information availability, aid quick decision-making and improve
supply chain integration.
Nestle India Ltd., is a part of the Nestle SA group, which is
one of the largest manufacturing companies in the world. The
company (with its headquarters in Vevey, Switzerland) was founded
by Henri Nestle in 1867. Nestle has two major divisions-Le Societe
des Produits which looks after the production and marketing and
Nesstec Ltd. which provides the technical assistance to the group
companies. Since its inception in 1867, the company has diversified
it product range from the infant weaning formula (which was its
first product) to beverages, confectionery, ice creams and pet
foods among others. In a span of 130 years the company has ranked
26th among the world's largest corporations and boasts of a
turnover of $48932.5 million and an employee strength of 221,144
people spread over 75 countries worldwide (Annexure A).
Nestle has long been viewed as one of the most multinational of
the multinationals. This is because today only 2% of its turnover
comes from Switzerland. Out of the remaining 98%, Europe
contributes 43.5%, North and South America contribute 36.5% and 18%
is contributed by Africa and Asia Pacific Regions.
Overview
Although Nestle has been associated with India since the
beginning of the century through the importing and trading of
infant food and condensed milk, manufacturing in India only began
with the setting up of the factory in Moga in 1962. The first
product to be manufactured was Milkmaid. In the last 35 years the
company has shown rapid progress and has increased its product
range to 80 products as of October 1997. Nestle India Ltd. now rank
22nd amongst India's most valuable companies (Annexure B). Its
gross revenue has increased from Rs. 1001.1 crores to Rs. 1213.8
crores in 1996. This remarkable growth has been achieved
through:
Rapidly creating greater manufacturing capacity, both at
factories as well as with copackers.
Taking measures to ensure availability and improved quality of
key raw materials-fresh milk in particular.
Strengthening of the sales and distribution network
(particularly in smaller towns).
Ambitious and cohesive manpower training and development
programs for the personnel of the company across all
disciplines.
The company's exports also resulted in a very successful year in
this area as exports grew by 27% to Rs. 250.8 crores in 1996. The
main contributors to this increase were the export of tea and
coffee to USA, Japan, Russia, Hungary and Taiwan.
Nestle India Ltd. wants to further increase its operations in
India and has started construction of its sixth Factory at
Bicholim, Goa for the manufacture of culinary products (a key
thrust area) for this purpose.
The spirit of Nestle
"Organizational excellence is never achieved through a one time
efforts; It is always a process of continuous improvement across a
number of areas of operation."
A key factor for Nestle's success has been its quest for
continuous improvement through ushering in greater productivity and
more efficiency in everyday operations Despite the infrastructure
impediments in India, Nestle has set itself high standards of
business performance. This is reflected through the essence of the
company-its mission statement.
Nestle's mission
"To be in every way the leading company in the Indian food
industry and a good corporate citizen by providing our consumers
with superior quality products, our shareholders with rapid growth
and fair returns and our employees with a challenging and
satisfying work environment."
To translate this spirit into a planned and measurable process,
Nestle has set up key objectives across all divisions.
Key Objectives
Production
To optimize production costs while enhancing product quality so
as to make Nestle products even more competitive in the market
place.
Sales and Marketing
To reach a sales turnover of 3000 crores by the year 2000.
To double the turnover every years.
People
To help employees to retain a long-term perspective and
integrate them fully with the company's business goals.
To retain a broad perspective while addressing individual
needs
To view growth as a continuous process.
To concentrate on attitudinal changes by developing leadership
skills, an appreciation of interdependence between units and the
enhancement of a sense of belonging to Nestle.
Finance
To maintain profit levels above the average for the food
industry in India.
Key Fact
This section offers a quick and simple overview of NESTLE,
making it an excellent place to begin learning more about the
Worlds Largest Food Company. Here introduction is given with some
key facts and figures, including 2001 Financial Information,
Company Profile, Historical Development and Main Brand.
Sales Analysis
By Geographic Area
In Million of CHF2006 (%)
Europe 25/70636.7
North and South America 22/26231.8
Africa, Asia and Oceania 13/49319.3
Other Activities 8/53712.2
69/998
By Main Product Group
In Million of CHF2001(%)
Beverages 19/14227.4
Milk Products, Nutrition and Ice Cream33427.6
Prepared Dishes and Cooking Aids 17/66025.2
Chocolate and Confectionery 10/66315.2
Pharmaceuticals 3/19994.6
Breakdown of 2006 Trading Expenses (in %)
Percentage
Raw Materials 26.2
Packaging 8.8
Salaries and Welfare Expenses 16.6
Depreciation 4.1
Other Trading Expenses 34.5
Total Trading Expenses 90.2
Trading Profit 9.8
Go to Financial Guide for additional facts and figures.
Company Profile
Chairman of the Board: Helmut O. Maucher
Chief Executive Officer: Peter Brabeck-Letmathe
Worlds leading food company
Switzerlands largest industrial company
Worldwide operations
495 factories
Groups total work force: 225, 808 people.
Historical Development
1866Companys foundation
1905Merger between Nestle and Anglo-Swiss Condensed Milk
Company
1929Merger with Peter-Cailler-Kohler Chocolates Suisses. S.
A.
1947Merger with Alimentana S.A. (Maggi)
1971 Merger with Ursina-Franck (Switzerland)
1985 Acquisition of Carnation (USA)
1990Acquisition of Buitoni-Perugina (Italy)
1992Acquisition of Rowntree (GB)
1994Acquisition of Perrier (France)
1998Acquisition of Spillers (GB)
2002Divestiture of Findus brand and parts of Nestl's frozen food
business in Europe.Divestiture of Hills Bros, MJB and Chase &
Sanborn roast and ground coffee brands (USA).
2006Acquisition of PowerBar.
Factories
Nestle has 6 factories in India. These are
1. Moga (punjab)The Nestle factory in Moga has the pride of
being the first and most comprehensive factory of Nestle India. Set
up in 1962, it represents the core competence of Nestle India in
the manufacture of milk products (Everyday, Milkmaid), beverages,
culinary products (Maggi sauces, noodles, soups etc.), weaning
cereals (Cerelac) and infant milk formulae.
2. Choladi ( Tamil Nadu)
The factory in Choladi started production in 1967. Situated
about 60 miles from Calicut, the factory today has 81 employees and
produces 1.5% of the total turnover of Nestle India. It is a 100
percent export oriented unit which processes freshly picked tea
leaves into soluble instant tea.
3. Nanjagud (Karnataka)
Production in this factory began in 1989 with the manufacture of
Nestle instant coffee and Sunrise. Today in addition to instant
coffee the factory also manufactures health beverages. The plant to
manufacture MILO was also commissioned at this factory. This
factory employs 145 people and is cited as a model in terms of
environment protection for its installations to purify waste water
as well as for its provisions for recycling coffee wastes.
4.Samalakha (Haryana)This factory was set up in 1993. Located 70
kilometres from Delhi , it manufactures weaning cereals , culinary
products ,health beverages and milk products. Recently the
expansion of manufacturing capacity for Milkmaid Dessert Mixes was
undertaken at this factory as this new and unique product category
is viewed to have great potential in the future.
5.Ponda (Goa)This Kit-Kat factory was set up in Goa in 1995 at a
cost of Rs. 50 crores. It represented a major step by Nestle
towards becoming the Number 1 Chocolates and Confectionery Company
in India.
6.Bicholim (Goa)
The construction work at this new factory is progressing with
speed. This factory will soon commence the manufacture of culinary
products, which is a key thrust area for the company and will
include latest technological improvements relating to this category
of products.
As a part of Nestles efforts towards continuous improvement and
excellence in Manufacturing operation, a Moga Improvement team
(MIT) was put in place at the Moga factory. The team comprised of
international experts from Nestle Technical Services (NESTEC) and
the local staff. In 1996, it embarked on a program with the single
minded objective of optimizing production costs while enhancing the
product quality so as to make Nestle products even more competitive
in the market place. Drawing upon Nestles global experience and
manufacturing expertise in 75 countries the team identified the
following areas for detailed study -
Process improvement to ensure the optimal usage of resources
Improvement of operational efficiency
Cost optimization
A series of small but critically important initiatives ranging
from redesigning laboratories to palletisation of raw materials and
packaging material utilization, manufacturing and filling loses and
labour man hours resulting in substantial savings and improved
productivity and machine utilization. In addition, several non
tangible benefits in the form of systems for sustainable
improvement in areas like factory maintenance planning tools , down
time recording systems and performance measurement tools were also
realized .
This project was highly successful and the company is now
implementing its key learnings of MIT in its other factories.
In a country as vast and diverse as India, supply chain
management is absolutely critical to rapid growth. Through BECA,
Nestle has concentrated heavily on streamlining and improving their
supply chain management in order to make it more dependable, more
cost effective and most importantly, more responsive to market
needs.
For better supply chain integration the planning of key
operations - purchase, production, distribution and sales are
synchronised to ensure that everybody works towards a common
business plan. Monthly objectives are broken down into weekly and
(wherever necessary) into daily plans and monitored regularly to
ensure smooth implementation and quick corrective action when
needed . Major benefits accrued thus far include reduction in
working capital through lower inventories of finished goods and
materials, better stock availability and reduction in obsolescence
of materials.
In addition to traditional performance indicators, quantifiable
performance measures have been identified and implemented in all
functional areas such as sales planning, production output, quality
assurance, material ordering transportation and warehouse
management. These measures are monitored regularly to gauge the
extent of improvement and identify root problems for taking
corrective actions.
Teams have been put in place at all factories and sales offices
to ensure the implementation is continuous and self-sustaining.
Areas of improvement are regularly identified and timebound action
plans established. For this purpose, standard tools such a Total
Quality Management(TQM), Kaizen, 5S and Small Group improvement
activity (SGIA) are being extensively used.
The efficacy of this hierarchical structure is seen in Nestles
performance over past few years of various products.
By 1989 the company had achieved a sales figure of approximately
Rs. 258 crores. 1989 was the year of launches. Seven new product
lines were launched in this year. This was also the year in which
the Nanjagud factory was set up. By the year 1992, this sales
figure was touching Rs 500 crores. In the 1990s the pace of
launches quickened and since the construction of the factory at
Samalakha, 20 new products have been introduced. By 1996, Nestle
had about 76 different products in its portfolio with various new
products in the pipeline as well. The sales figure now touched Rs.
1214 crores. Thus sales grew by 450% over a period of one and a
half decades.
Today Nestle is Present in Different Markets with the Following
Main Brands
Soluble coffee
Nescafe, Taster's Choice, Ricore, Ricoffy.
Roast and Ground Coffee
Hills Bros., MJB, Bonka, Zoegas, Loumidis
Mineral Water
Perrier, Contrex, Vittel, Valvert, Quezac, Arrowhead, Poland
Spring, Buxton, Vera, Blaue Quellen, Calistoga, Santa Maria, San
Pellegrino.
Other beverages
Nesquik, Nescau, Nestea, Milo, Carnation, Libby's Caro.
Dairy Product
Nido, Nespray, Carnation, Milkmaid/ La Lechera, Gloria, Neslac,
Barenmarke.
Breakfast Cereals
Nestle
Coffee Creamers
Coffee-mate
Infant Foods and Dietetic Products
Nestle, Nan, Lactogen, Cerelac, Nestum, Guigoz
Culinary Products (Bouillons, soups, seasonings, prepared
dishes, canned food, pasta, sauces)
Maggi, Crosse and Blackwell, Libby's, Thomy, Builtoni,
Contadina
Frozen Foods
Findus, Stouffer's Buitoni, Maggi
Ice Cream
Nestle, Frisco, Dairy Farm, Magnolia, Motta, Camy , ect.
Refrigerated Products (yogurts, desserts, pasta sauces)
Nestle, Locatelli, Vismara, Buitoni, Contadina
Chocolate and Confectionery
Nestle, Crunch, Cailler, Frigor, Chokito, Sarotti,
Galak/Milkybar, Yes, Kit Kat, Quality Street, Smarties, Baci, After
Eight, Baby Ruth, Butterfinger, Lion, Nuts, Rolo, Aero, Polo,
etc.Food Services and Professional Products
Chef, Davigel, Santa Rica
Pet Care
Friskies, Fancy Feast, Aplo, Mighty Dog, Gourmet.
Specialized products for the food industry
Food Ingredients Specialties (FIS)
Ophthalmological products
Alcon
Cosmetics
L'Oreal
New Product Launches
To put all the product launches into perspective, Nestle now has
80 products including various flavors and variants this awesome
list of 80 products for most companies is an overfull palate.
Nestle India Ltd. still has a variety of new products in the
pipelines. It believes in slowly colonizing as much territory as
fast as it can, adapting to native conditions and then work at
'Holding off the advancing herds'. Nestle products can be broadly
classified into 5 main ranges:
Milk Product
Chocolate and Confectionery
Beverages
Culinary
Food Service.
Milk Products
This category which comprises of condensed milk, baby milk
foods, milk powders, acidified infant food, and other milk
products, showed a slump in 1996 as sales of milk products fell
from Rs. 31.4 crores in 1995 to Rs. 31.2 crores in the said year.
Consumer off take remained depressed throughout this year as a
consequence of high price increases necessitated by substantial
increases (+ 50%) in the cost of basic raw materials (fresh milk),
over the past two year.
However Nestle retained its leadership in the infant food market
with Cerelac Lactogen and Nestum and even introduced a new flavor
of Cerelac-Cerelac Rice in 1996.
Chocolates and Confectionery
Nestle pursues the objective of accounting for one in every
three rupees in its sales figures through chocolates and
confectionery. This has thus been one of the thrust areas in
Nestle. Nestle this year widened its range of flavors in POLO,
backed by its tremendous success in the Indian Market by adding
POLO Spearmint to its Portfolio. This new flavor has also received
an encouraging response in the market according to market
analysts.
Milkybar also retained its position as the number one white
chocolate brand in India, however it did not record a significant
increase in sales, as a majority of Indian tastes still do not
accept this flavor.
This year however, was a year of tremendous success for Kit Kat.
This internationally renowned brand gained a large increase in the
Market share in the past year and Nestle officials are hopeful that
this will further increase in the coming years. However this brand
along with its success has brought with it its share of Controversy
as the Union of India has launched a Litigation against the Kit Kat
family pack.
In 1997 Nestle added to its range of confectionery by
introducing SPLASH, "A soft hearted, hard boiled sweet" this is
being promoted as a sweet unique to India and is positioned to a
target audience in the age group of 4 to 12 years and "anyone with
a soft heart" is a potential customer. Priced at Rs. 1 for a
7.5-gram candy Splash has been introduced selectively in the South
and has been speculated to repeat Polo's performance. Nestle's
officials claim that this candy has the potential to grab a quarter
of the 700 crores confectionery market.
The most recent of Nestle affairs with the confectionery market
has been the introduction of Mithai Magic, which is "a little
Mithai, a little magic." This new product was launched in September
1997, in time for the Diwali purchases of sweets. This brand has
been positioned somewhere between chocolates and traditional sweets
and the company is employing a push strategy to promote this
brand.
The latest launch of Nestle in the Chocolate and confectionery
division is Charge.
Beverages
This year has been very successful in the beverages market for
Nestle. The sales of beverage have increased from Rs. 323.3 crores
in 1995 to Rs. 398.8 crores in 1996.
Nestles Flagship Nescafe, which was pegged at Rupees 1040 per
kilogram before the launch of Tata Cafe, met with stiff competition
from Tata Cafe priced at Rupees 550 per Kg., once it was
introduced. Tata cafe claimed to have garnered a market share of
17% by December 1996. This forced Nestle to cut prices of Nescafe
to Rupees 840 per Kg. However Nescafe still retains 83% market
share in the Rs. 177 Crores market for pure instant coffee.
Nestle Sunrise also showed an increase in sales and captured 20%
of the Rs. 253 crores market in Mixed instant coffee.
This year Nestle also launched MILO, an internationally renowned
chocolate energy drink, and the response for this has been
encouraging.
Nestle has introduced Tasters Choice tea bag pitched against Taj
Mahal Tea bags.
Culinary Products
The market in culinary products had witnessed a high growth
consequent to aggressive pricing decisions on existing products and
the introduction of a variety of new products to match the needs of
the Indian Housewife. Encouraged by this success Nestle launched
Maggi Macoroni Snack in three flavors-Chicken, Masala and Tomato.
Nestle officials say that this would consolidate Maggis position as
the number 1 culinary brand in India. The product focuses on
convenience and innovation as its Unique Selling Proposition. This
snack has opened a new segment for the maggi brands. The brand is
positioned as Youthful and is represented by the twists and curls
of the macaronic snack. It is speculated to be introduced in a
phase manner nationwide to be place in the 7.5-lakh outlets that
Maggi noodles sells in.
In the spirit of catering to Indian tastes Maggi introduced
maggi pickles in five variants benchmarked to give the "ghar ka
swad". Maggi Dosa Mix was also introduced to offer superior quality
and added convenience. Apart from this Milkmaid Kalakand Mix, a
traditional north Indian sweet of premium quality was added to the
milkmaid dessert mixes. Maggi soup also launched three new
variants. Maggi Rassam in particular was noticeable as yet another
attempt to make traditional Indian cooking a little bit easier.
Food Services
Food service items basically deal with the out of home segments,
which would include vending machines. Nestle's food service
business is poised for rapid expansion to meet the growing need for
such a reliable, time saving and cost effective service in this
modern age.
Nestle wants to sell 500 million cups of tea and coffee through
its vending machines in the year 2000. It currently has 3500
vending machines at assorted locations (both public and private).
In 1995 Nestle food service did well to vend 40 million cups of
Nescafe and Tasters Choice tea. Its 1996 sales were placed at 59
million cups of Nescafe and 36 million cups of tea; this figure was
however way below the expected sales for the year.
In 2001 and 2002 nestle has come with a number of new products
like it has come with many of the diary products like milk. The
milk is avaliable in the market in the full cream , toned and
double toned milk. The nestle has also come with the dahi, butter
which is available in the market but at very few shops .
NESTLE has also come with the products which will target the
children like FRUITIPS,MILKYBAR CHOO,NESTLE CHINESE MAGGI
NOODLES.BIBLIOGRAPHY
www.nestle.com www.google.com
NEWSPAPER
MAGZINES
ANNEXUREFinancial Results and Operation2006(Rs. in
millions)1996(Rs. in millions)
Gross Revenue1214410011
Gross Profit (BIT)13431183
Interest506315
Depreciation 227165
Provision for Tax68171
Profit after taxation542532
Extraordinary tax Payment14116
Profit after taxation and extraordinary item528416
Profit brought forward215145
Reserves written back49130
Balance available for appropriation792691
Interim dividends paid353321
Final Dividend proposed-97
Transfer to debenture redemption reserve422
transfer to general reserve5456
Surplus carried in Profit and loss Account343215
Gross Revenue increased by 21% during the year, and crossed the
1200 crores mark . Domestic sales grew by 19% and exports
(including sales to Nepal ) grew by 27 %. Net profit after tax grew
by 27% - From Rs 41.6 crores to Rs 52.8 crores.
Throughout 2003, there was a marked lack of buoyancy in the
domestics market caused primarily by increased inflation and the
financial liquidity squeeze which affected all segments of the
industry and trade .
Interest costs rose substantially on account of higher funding
needs to service recently commissioned projects as well as to meet
increased exports for which materials often had to be purchased in
advance .
Considering the recessionary market conditions, Nestles overall
sales and progression during 2003 can be considered
satisfactory.
Financial Information
In millions of CHF2006
Sales81 422
EBITDA (a)12 516
as % of sales15.4%
EBITA (b) 9600
as % of sales11.8%
Trading Profit9 186
as % of sales11.3%
Net Profit5 763
as % of sales7.1%
Capital expenditure3305
Equity29 904
Total Assets65 524
Research and development costs1 038
Market Capitalization, end December146 864
(a) Mainly Pharmaceutical products and Water, managed on a
worldwide basis.
(b) Mainly corporate expenses, research and development costs,
amortisation of goodwill
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