Nestlé Case

I- Short company overview

a- Key facts

History

The Anglo- Swiss Condensed Milk Company, founded by Americans Charles and Georges Page in 1866, and the Société Farine Lactée Henry Nestlé, founded in 1867, merged in 1905 and became the Nestlé and Anglo-Swiss Milk Company.

During the World War I, Nestlé had to face some severe disruptions but it also created new demands for dairy products (milk-based products), and possessed at the end of the war, about 40 factories around the world. After the rude period of the twenties, Nestlé continued expanding its product lines by creating other successful products as Nescafé (1938) and Nestea and Nesquik (1948). And at the end of the World War II, Nestlé experienced a huge growth and dozens of products were added to the product lines and the firm acquired outside companies.

During the seventies, due to the rising oil prices and the slow growth in industrialised countries, Nestlé decided, to face the changing environnent, to diversify its activity in order to be more independent concerning the food industry. Nestlé became so in 1974 a major shareholder of L'Oréal and acquired Alcon Laboratories in 1977.

Then, in 1985 Nestlé acquired the American food giant Carnation, and in 1986 the "Nespresso" idea was born. During the nineties, Nestlé found worldwide partners in cereal (General Mills) and beverage (Coca-Cola).

The year 2005 is marked as a tournament. Because of the evoluating world's eating, the firm had to adapt its activities to become a producer of food with added benefits and a provider of products and services in the area of nutrition, health and wellness. In 2006, it is the creation of FoodServices Strategic Business Division, and in 2010, the creation of Nestlé Health Science and Nestlé Institute of Health Sciences.

In 2011, Nestlé made some acquisitions: 60% share in Hsu Fu Chi and 60% share in the Yinlu Foods Group (Yinlu) in China. Finally, the company works, in 2012, with the Fair Labor Association on our cocoa supply chain and is part of the tops list of global companies cutting carbon emissions.

Some facts

Founded in Switzerland in 1866, Nestlé now has operations in 194 countries around the world. The company has strong position in 86 countries, by means of 8 business lines, and it also owns 447 factories. In 2012, 79% of Nestlé's swiss made products were exported globally.

Sales in million: 1,518 CHF in switzerland and 92,186 CHF in the world

Employees: 10,184 in switzerland and 339,000 in the world. In switzerland, more than 10,000 people of more than 90 nationalities work for the group

Investment in environmental sustainability projects and activities: over 5.3 million CHF

R&D in million: 933 CHF in switzerland and 1,544 CHF in the world.

b- Business description

Nestlé is today the world's leading nutrition, health and wellness company, with a 135-year history and operations in virtually every country in the world.

Nestlé's objectives are to be recognized as the world leader in Nutrition, Health and Wellness, trusted by all its stakeholders, and to be the reference for financial performance in its industry. The company is trying to achieve leadership and earn that trust by satisfying the expectations of consumers, of shareholders, of the communities in which it operates and of society as a whole.

One of the most important parts of its business strategy and culture is the development of human capacity in each country where it operates. As described in The Nestlé Sustainability Review (published with their 2001 Management Report), its business model, which started in Brazil in the 1920s, is to establish strong national and regional companies. Beginning by offering free educational assistance and loans to dairy farmers, then building factories, educating managers, technical staff, and factory personnel, and then maintaining long-term relationships with them.

Moreover, the average number of years of service at retirement is 27 years (in the top 20 countries that employ 80% of its people), and its employee turnover is low (less than 5% per year).

Its strategy for maintaining its position as the world's leading food and beverage Company, through its basic business principle, which first is Nutrition, Health and Wellness, places priority on long-term business development over short-term temporary gain.

According to its organizational structure, Nestlé is divided in several departments (Corporate Governance, Compliance & Corporate Services, Corporate communications, Human Ressources, Operations, Finance and control, Strategic Business Units, Marketing and Sales, Innovation, technology and R&D) and operative segments (Nestlé Waters, Nestlé Nutrition, Nespresso, Nestlé Professional, Nestlé Health Science, Zone Europe, Zone Asia/Oceania/Africa, Zone Americas).

Nestlé's Board of Directors is made up by 14 people and led by its Chairman Peter Brabeck-Letmathe, who is the President of the Executive Board and also shareholder of L'Oréal.

c- Main products and services

Nestlé S.A. is a Switzerland-based holding company of the Nestle Group which, together with its subsidiaries, provides nutrition, health, and wellness products worldwide. The company, which mission is « Good Food, Good Life », offers a wide range of food and beverage categories and eating occasions, from morning to night.

13 product families and the associated brands

Baby foods brands (Cerelac, Gerber, Gerber Graduates, NaturNes, and Nestum), Bottled water brands (Nestlé Pure Life, Perrier, Poland Spring, and S.Pellegrino), Cereals brands (Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, and Nesquik Cereal), Chocolate & confectionery brands (Aero, Butterfinger, Cailler, Crunch, Kit Kat, Orion, Smarties, and Wonka), Coffee brands (Nescafé, Nescafé 3 in 1, Nescafé Cappuccino, Nescafé Classic, Nescafé Decaff, Nescafé Dolce Gusto, Nescafé Gold, and Nespresso), Culinary, chilled and frozen food brands (Buitoni, Herta, Hot Pockets, Lean Cuisine, Maggi, Stouffer's, and Thomy), Diary brands (Carnation, Coffee-Mate, La Laitière, and Nido), Drinks brands (Juicy Juice, Milo, Nesquik, and Nestea), Food service brands (Chef, Chef-Mate, Maggi, Milo, Minor's, Nescafé, Nestea, Sjora, Lean Cuisine, and Stouffer's), Healthcare nutrition brands (Boost, Nutren Junior, Peptamen,