* For a limited period, this profile and selected other Adbrands pages which would normally be available only to subscribers, have been opened to all users. Please note that access to most other profiles as well as the account assignments database is still limited to paid subscribers *
Nestlé is the world's biggest food manufacturer, with almost 450 factories spread across the globe, and a portfolio that ranges from baby foods to pet care, from chocolate to mineral water, from coffee to frozen pizza. Its world-famous brands include Nescafe, Kit Kat, Maggi, Purina and Perrier, among many others. The group also controls a large shareholding in cosmetics company L'Oreal and has its own growing medical skincare division. However, aside from those sidelines, recent years have seen a greater concentration on a focused food and beverage business. In particular Nestlé has leveraged its performance in sectors such as ice cream and petfoods with an aggressive acquisition strategy, and divested businesses where it has failed to gain a leading position. At the same time, it has placed health and wellness at the forefront of its agenda, developing the widest possible range of nutritionally balanced products under the overall umbrella "Good Food, Good Life". Yet despite that focus, overall growth has slowed dramatically since 2012 to its lowest level in years as a result of fierce competition from faster-moving niche food and beverage brands. See also Nestlé USA, Nestlé UK, Nestlé Australia, Nestlé Latin America and Nestlé Japan.
See separate profiles for brand advertising
Who handles Nestlé's advertising? Click here for agency account assignments for Nestlé.
Avenue Nestlé 55
Tel: 41 21 924 2111
Adbrands Weekly Update 16th Aug 2018: Nestle launched a massive review of its global public relations roster, according to the Holmes Report, with a view to consolidating the business among a smaller number of agencies while also reducing costs. Currently, Nestle works with all the major marketing groups, including Edelman, Omnicom's Ketchum, IPG's Weber Shandwick and Golin, Publicis-owned MSL and WPP's Ogilvy.
Adbrands Weekly Update 22nd Feb 2018: Nestle's performance dipped to a new multi-year low in 2017. For years, the Swiss food giant had prided itself on organic growth between 5% and 6% per year, until it was forced to downgrade that target three years ago. Reported revenues of around €80.9bn in 2017 represented organic growth of just 2.4%, Nestle's weakest annual performance for at least two decades. In the final quarter, growth fell to just 1.9%. Key troublespots were North America and Brazil. The biggest problem in the US was a steep decline in confectionery sales - that business is to be sold this year - and also in ice cream as a result of competition from upstart low-fat brand Halo Top. Group net profit slumped by 15% to the equivalent of €6.8bn, the lowest result since 2004, as a result of a range of adjustments including a huge impairment charge against goodwill and other assets. The slump would have been even worse had it not been for a lower tax charge. Pretax profits were down almost 25% year-on-year. In another blow, German newspaper SZ reported that leading supermarket chain Edeka has threatened to stop stocking more than 160 Nestle brands in a row over pricing. Edeka, in conjunction with its buying partners Intermarche of France and Coop Switzerland, claims that Nestle offers preferential pricing to their rivals Aldi and REWE.
Adbrands Weekly Update 7th Dec 2017: Nestlé made a big additional push into functional health foods and medical nutrition with a deal to acquire Canadian firm Atrium Innovations for $2.3bn, a little over three times annual revenues. Atrium makes and markets a broad range of vitamins, minerals and dietary supplements sold through health food stores and pharmacies. Its top brands include US-based Garden Of Life and Pure Encapsulations and Germany's Wobenzym. They join what is already a sizeable collection of products under the Nestlé Health Science umbrella including Boost, Resource, Peptamen and Nutren.
Adbrands Weekly Update 19th Oct 2017: Quarterly results from Nestle and Unilever showed the importance of emerging markets in driving what little growth both groups are experiencing. On an organic basis, Nestle reported 0.8% growth from developed markets, compared to 5.1% in emerging markets. Higher prices contributed almost a third of the combined overall lift. North America was one of Nestle's weakest markets with sales more or less flat year on year, while Western Europe reported very slight growth. Unilever suffered a continuing decline in underlying sales in developed markets of 2.3%, offset by 6.3% growth in emerging markets. North America was down by 2.9% and Europe by 1.6%. In Unilever's case almost all the combined group's 2.6% underlying growth was contributed by higher pricing.
Adbrands Weekly Update 23rd Feb 2017: Nestle reported its weakest growth for at least two decades in 2016 as a result of deflation and weak global economies. Organic growth came in at just 3.2%, only the second time in 20 years that indicator has fallen below 4% for the Swiss food giant. Reported revenues were SFr 89bn, or approx €82.1bn, and net profit fell by 6% to around €8.1bn as a result of a higher tax charge and lower income from joint ventures. Profit before tax and joint ventures was up 6%. New CEO Mark Schneider vowed to push through further efficiency measures to cut costs, but will also maintain steady growth, especially in the coffee business and health sciences. However he ruled out large acquisitions.
Nestlé has maintained a strong position in the global food market, strengthening its hand in several key segments including ice cream, beverages, frozen meals, pet care and culinary products through acquisitions, or well-chosen partnerships. No rival comes close to matching its broadly diversified portfolio, and its name is almost certainly the world's best-known food and beverage brand, and probably the most trusted.
Nestlé has five operating divisions. The food businesses operate as three geographic divisions in the Americas, Europe and Asia Pacific regions, while the company's water and healthcare businesses operate as separate global units. The group's products fall into six categories. However across these, there are six main brands which between them generate more than 70% of group revenues. The biggest of all is the main Nestlé brand, used for dairy products, mineral water, confectionery and prepared foods. It alone generates sales of around SFr 45bn a year (or almost €30bn), equivalent to 40% of combined revenues. It is supported by Nescafe, Nestea, Maggi, Buitoni and Purina, which between them contributed a further SFr 30bn or so in revenues.
Beverages are Nestlé's biggest business, and also its most profitable, contributing almost a third of operating profit. Powdered and liquid beverages excluding water generated combined revenues in 2017 of SFr 20.41bn (€18.4bn); while Nestlé Waters (Perrier, Vittel etc - see separate profile) reported additional sales of SFr 7.96bn (€7.2bn), of which SFr 7.46bn (€6.7bn) was actually water (as opposed to other soft drinks). The group was a pioneer in the creation of soluble or powdered drinks, using a process it first developed for milk. That portfolio is now dominated by Nescafe, by far the biggest soluble coffee brand worldwide. Combined sales from coffee alone, and coffee making systems, all included in the powdered and liquid beverages total, were SFr 9.07bn (€8.3bn) in 2016. Nestle is the global leader in coffee with around 23% share in 2015, according to Euromonitor. (JAB, owner of Jacob Douwe Egberts and Keurig, ranks #2 with around 15%).
In addition Nestlé is the world leader in non-coffee soluble beverages with chocolate drinks Nesquik and Nescau, and Milo chocolate malt. Nestea and other ready-to-drink chilled teas are produced by Beverage Partners Worldwide, a joint venture with Coca-Cola in Europe and Canada. Until 2014, the group also owned shelf-stable fruit juice business Juicy Juice, but this was sold off in 2014 to private equity and is now part of Harvest Hill Beverage Company.
Linked to its coffee business is the fast-growing coffee vending system Nespresso, sales of which are now around SFr 4bn. The group launched a new premium tea dispensing system, Special.T, in September 2010, but so far sales are restricted to the launch markets of France and Switzerland. The group also markets more robust coffeemaking systems for professional or office use. Jacobs Douwe Egberts and its linked company Keurig are its main rivals in consumer coffee systems; Mars has a small presence in office systems.
Sitting behind Beverages is the Milk Products & Ice Cream division, with combined revenues of SFr 13.45bn (€12.1bn) in 2017. Traditionally the core of this business is provided by shelf-stable dried powder products ranging from infant products (Nido, Nespray and others) to Coffee-Mate, or milk-based cooking products such as Carnation and La Lechera. More recently the group has introduced chilled dairy products under its shelf-stable brand names, as well as ready-to-drink flavoured milks, La Laitiere, Yoco and LC1 yogurts, fermented drink Chamyto, and low-fat concentrated milk Gloria. Nestlé enjoyed some success with the roll-out of Sveltesse as the umbrella for a wide range of wellness-oriented chilled low-fat dairy products and other other healthy dessert items.
However, in general the chilled dairy sector has been one in which Nestlé has delivered an uncharacteristically weak performance compared to rivals. In the UK, Nestlé acquired a portfolio of local yogurts in 2002 including Ski and Munch Bunch, but these still rank far behind behind Muller and Danone. In 2003, the company formed an alliance in Germany and Austria with Muller, licensing that company rights to its LC1 brand. However Nestlé's chilled dairy range has struggled to overtake the considerable overall lead already enjoyed in this sector by Danone. In 2006, the group merged all its chilled dairy operations in the UK and mainland Europe into a joint venture controlled by Lactalis of France. Nestlé's chilled dairy products are marketed in Brazil, Argentina and several other Latin American markets since 2003 by Dairy Partners Americas, a joint venture with New Zealand's Fonterra dairy cooperative.
Milk products also includes a large portfolio of breakfast cereals, which are marketed outside the US by Cereal Partners, a joint venture with General Mills. Combined sales of milk products excluding ice cream totalled SFr 10.54bn (€9.7bn) in 2016. [Continued on next page...]
All rights reserved © Mind Advertising Ltd 1998-2018