Nestle - a Swot Analysis

Nestle - A SWOT analysis

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Nestle India Limited is the Indian arm of Nestle SA, which holds a 51% stake in the company. It is one of the leading branded processed food companies in the country with a large market share in products like instant coffee, weaning foods, instant foods, milk products, etc. It also has a significant share in the chocolates and other semi-processed foods market.

NestlÐ"©'s leading brands include Cerelac, Nestum, Nescafe, Maggie, Kitkat, Munch and Milkmaid. To strengthen its presence, it has been the company's endeavor to launch new products at a brisk pace and has been quite successful in its launches.

Nestle business break-up

Segments Brands CY01 sales CY02 sales CY03 sales

Milk Products &

nutrition Everyday Dairy Whitener,

milk powder, Milkmaid, Milk,

Dahi, Butter, Cerelac, Nestogen 8,159 8,847 9,880

% of sales 42.5% 43.2% 43.4%

% growth 10.6% 8.4% 11.7%

Beverages Nescafe, Milo, Nestea 5,627 4,894 5,449

% of sales 29.3% 23.9% 23.9%

% growth 14.7% -13.0% 11.3%

Prepared dishes/

cooking aids (Culinary) Maggi (noodles, pickles,

soups, sauces) 2,765 3,503 4,094

% of sales 14.4% 17.1% 18.0%

% growth 19.6% 26.7% 16.9%

Chocolates &

confectionery Munch, KitKat, Bar One, Classic,

Choco Stick, MilkyBar Choo,

Nestle Fruit & Nut 2,646 3,227 3,366

% of sales 13.8% 15.8% 14.8%

% growth 21.4% 21.9% 4.3%

Total Sales 19,197 20,470 22,790

% growth 14.4% 6.6%

*(figures in Rs m)

Strengths

Parent support - Nestle India has a strong support from its parent company, which is the world's largest processed food and beverage company, with a presence in almost every country. The company has access to the parent's hugely successful global folio of products and brands.

Brand strength - In India, Nestle has some very strong brands like Nescafe, Maggi and Cerelac. These brands are almost generic to their product categories.

Product innovation - The company has been continuously introducing new products for its Indian patrons on a frequent basis, thus expanding its product offerings.

Weakness

Exports Ð'- The company's exports stood at Rs 2,571 m at the end of 2003 (11% of revenues) and continue to grow at a decent pace. But a major portion of this comprises of Coffee (around 67% of the exports were that of Nescafe instant to Russia). This constitutes a big chunk of the total exports to a single location. Historically, Russia has been a very volatile market for Nestle, and its overall performance takes a hit often due to this factor.

Supply chain - The company has a complex supply chain management and the main issue for Nestle India is traceability. The food industry requires high standards of hygiene, quality of edible inputs and personnel. The fragmented nature of the Indian market place complicates things more.

Opportunities

Expansion