Nestlé with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestlé and is today the World’s biggest food and Beverage Company. Sales at the end of 2008 were CHF 110 billion, with a net profit of CHF 16 billion. It has a workforce of over 250,000 employees and has factories or operations in almost every Country in the world.
Nestle India Limited, (61.9% owned by Nestle SA), is one of the largest and the most diversified Food and Beverage (F&B) company in India. While Nestle entered the Indian market way back in 1912, when it began as a trading company, its real activity in the country started in 1961 when it set up its first factory at Moga, Punjab to develop and process fresh milk. Today, the company has seven factories across the country and is now involved in manufacturing and marketing a range of quality products across F&B segments. It has well established brands including Maggi, Nescafe,Lactogen,Cerelac, Kit Kat, Munch, Milkmaid etc. Nestle operates in four key segments viz., Milk Products & Infant Nutrition, Culinary, Beverages and Chocolate & Confectionery.
The company enjoys leadership position in its core categories like Baby Foods, Instant Noodles and Instant Coffee. Nestle enjoys distinct advantage over its competitors in the F&B space on account of its strong focus on developing products around the Nutrition, Health and Wellness platform and a culture of renovation and innovation in its offerings.
The company earns majority of its revenues from its domestic business (90% of total sales), which is exhibiting an uptrend boosted by strong consumer demand across categories, rising health awareness and growing modern retail trade. In terms of exports (account for 10% of total sales), the company’s mainstay is coffee exports.
Nestle is the second largest player in the Chocolate & Confectionery segment with almost 25% marketshare, second only to Cadbury. Nestle’s brands include Kit Kat and Munch (wafersegment), Milkybar (white chocolate) and Nestle Milk & Bar one (milk chocolate). The Chocolate segment is expected to grow at 12-15% over the next five years owing to lower penetration levels (20%), a large youth population and recent entry of global players like Hersheys, which is expected to improve the market size. Moreover, value sales are expected to benefit immensely from rising disposable incomes as well as increasingly Western consumer lifestyles.
These are expected to spur consumers to opt for chocolates over traditional Indian sweets. Nestle is well positioned to tap this growth opportunity through lower price offerings (Munch) for the mass market, Value added offerings (Kit Kat ) for the urban market. In the organized confectionery market, Nestle is present through Polo(mint) and Nestle Éclairs. The confectionery market in India is extremely competitive and operates on thin margins as it is highly volume driven.