EXECUTIVE SUMMARY

NEW REPORT GUARANTEE

If you purchase a report that is updated in the next 60 days, we will send you the new edition
and data extract FREE!
TRENDS
Increasing numbers of new brand launches and extension of product portfolios from existing
players such as Nestl and Mondelez was the latest trend in 2015. Furthermore, the established
players increasing the penetration into rural India also helped the growth of chocolate
confectionery in India in 2015.
COMPETITIVE LANDSCAPE
Mondelez India Foods Ltd (previously known as Cadbury India Ltd) maintained the lead with a
value share of 55% in 2015. The company introduced smaller SKUs at lower price points and
also increased penetration into rural India. Furthermore, the companys brands such as 5 Star and
Cadbury Dairy Milk have strong recall value when compared to other brands in chocolate
confectionery.
PROSPECTS
The increasing presence in India of international brands such as Schmitten and Luvit in chocolate
confectionery will fuel the forecast growth. The smaller SKUs entering rural India and
expanding infrastructure facilities across rural India will also support the forecast growth.
While the industry is large in terms of size, it is still at a nascent stage in terms of development.
Out of the countrys total agriculture and food
produce, only 2 per cent is processed. The highest share of processed food is in the Dairy sector,
where 37 per cent of the total produce is processed, of which 15 per cent is processed by the
organized sector. Primary food processing (packaged fruit and vegetables, milk, milled flour and
rice, tea, spices, etc.) constitutes around 60 per cent of processed foods. It has a highly
fragmented structure. Several processing units are in unorganized sector In comparison, with the
organized sector .

NESTLE Group Background

Nestle SA, Switzerland is amongst the worlds largest food and beverages companies. The
company is progressively evolving from a respected, trustworthy food and beverage company to
a respected, trustworthy food, beverage, nutrition, health and wellness company. This objective is
encapsulated in Good Food, Good Life. The principle activities of the group encompass:
beverages, milk products, nutrition and ice cream; prepared dishes and cooking aids; chocolate,
confectionery and biscuits; water; and pet care. It has 511 factories in 86 countries around the
world.

Background - Nestle India

Nestle India is one of the leading companies in the FMCG space in India. The company is
acknowledged amongst Indias Most Respected Companies. Nestle products are sold
throughout India and are also exported to Russia, Hungary, Japan, USA and several other
countries. These include certain international products like Nescafe and Lactogen, For three
years in succession [from 1999-2000 to 2001-2002], Nestle India was recognised with the top
Exporter Award for export of Instant Coffee, and for export of all coffees to Russia and CIS
Countries.

Nestl set up its operations in India, as a trading company in 1959 and began manufacturing at
the Moga factory in 1962. The production started with the manufacture of Milkmaid and other
products were gradually brought into the fold. Nestl India Limited was formally incorporated in
1978 prior to which the manufacturing license was issued in the name of the Food Specialties
Limited. The corporate office is located at Gurgaon and the registered office at M-5A, Cannaught
Circus, New Delhi.

At present Nestl has 7 manufacturing units countrywide which are successfully engaged in
meeting the domestic as well as the exports demand. In addition there are several co packing
units. Manufacturing units are located at,

Choladi (Tamilnadu) -- Instant Tea Export 1969

Nanjangud (Karnataka) -- Coffee & Milo 1989
Samalkha (Haryana) -- Cereals, Milkmaid Deserts 1992
Ponda (Goa) -- Chocolates & Confectionery 1995
Bicholim (Goa) -- Noodles and Cold Sauces 1997
Panth nagar (Uttranchal) - Noodles 2006
Moga (panjab) -- Milkmaid and other products 1962.

VISION:

Respected, Trustworthy food, Nutrition, Health and Wellness Company

To rapidly build Nestle India as the respected and trustworthy leading food,

nutrition,

health and wellness company ensuring long term sustainable and profitable growth.

MISSION:

Nestle is dedicated to providing the best foods to people throughout the day,
throughout their lives, throughout the world. With our unique experience of anticipating
consumers needs and creating solutions, Nestle contributes to your well-being and
enhances your quality of life.

OBJECTIVES:
To make companys customers winners by constantly exceeding their expectations
Nestle Indias main objective is to manufacture and market the products in such a way as
to create value that can be sustained over the long term for shareholders, employees,
consumers, and business partners.
Be a good corporate citizen and contribute positively to the society in which it operates.
Conservation of natural resources and minimization of waste.
CHOCLATE AND CONFECTIONARY: Kit Kat, Milkybar, Eclairs, Polo are the
strong brands available in the market


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 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 - The company has the potential to expand to smaller towns and other
geographies. Existing markets are not fully tapped and the company can increase
presence by penetrating further. With India's demographic profile changing in favour of
the consuming class, the per capita consumption of most FMCG products is likely to
grow. Nestle will have the inherent advantage of this trend.

 Product offerings - The company has the option to expand its product folio by
introducing more brands which its parents are famed for like breakfast cereals, Smarties
Chocolates, Carnation, etc.
Global hub - Since manufacturing of some products is cheaper in India than in other
South East Asian countries, Nestle India could become an export hub for the parent in
certain product categories.
Threat
Competition - The company faces immense competition from the organised as well as
the unorganised sectors. Off late, to liberalise its trade and investment policies to enable
the country to better function in the globalised economy, the Indian Government has
reduced the import duty of food segments thus intensifying the battle.
Changing consumer trends - Trend of increased consumer spends on consumer durables
resulting in lower spending on FMCG products. In the past 2-3 years, the performance of
the FMCG sector has been lackluster, despite the economy growing at a decent pace.
Although, off late the situation has been improving, the dependence on monsoon is very
high.
Sectoral woes - Rising prices of raw materials and fuels, and inturn, increasing
packaging and manufacturing costs. But the companies' may not be able to pass on the
full burden of these onto the customers (short it and make a table of SWOT)

CORECOMPETENCIES OF THE COMPANY:

The culture of innovation and renovation, continuous improvement and the thrust on value-formoney and affordability have helped the company to focus on adding value for the consumer. Its
Competitive advantages are,
A pool of qualified suppliers that are directly aligned with under represented and
emerging communities and can promote positive relationships with customers,
Better quality goods and services at a lower price as a result of increased competition and
an extended supply base,

 Access to new capabilities and innovations,

Competence in research and development:
The company has access to Nestle groups technology, brands, expertise and the
extensive centralized research and development facilities.
KEY COMPETETORS OF NESTLE-INDIA:

The growth potential of the food processing industry would attract domestic as well as
multinational players in the market. The present market is seeing players like Heinz, Mars,
Conagra, Hershey, Pepsi, ITC, Dabur, Britannia, Cadbury, HLL, Pillsbury, Nestle and Amul,
Smithkline Beecham, etc and a host of local manufacturers offering competition with their
established brands on national level. Key Competitors for Nestle- India
are,

Key Competitors of Nestle-India

Category

Competitors

Chocolate

Cadbury, Hershey, Parle, Wrigley, Perfetti

Baby food and Instant coffee are categories where brand loyalties are very strong and Nestle is
the market leader. HUL is a significant competitor to Nestle in instant coffee.
While Wockhardt is the main competitor in the baby foods market. The market for culinary
products, semi-processed foods such as noodles, ready mixes for Indian ethnic breakfast and
sweets, is largely an urban market. HUL and Indo Nissin Foods are the main competitors in these
product

segments.

Nestle

has

also

achieved

significant

25%

share

in

the

chocolate/confectionery market. The company has recently expanded its dairy products portfolio
to include, milk, curd and butter. The companys entry into the mineral water segment is a
concern, as the segment is already overcrowded and the company faces stiff competition
especially from the Cola manufacturers.

MARKETING

STRATEGIES

Nestl India is a Vibrant Company that provides consumers in India with products of global
standards and is committed to long-term sustainable growth and stakeholder satisfaction.

PRODUCT DIFFERENTIATION STRATEGY:

Nestle is using the product differentiation strategy by providing the superior quality products.
Their main focus is to keep the customers loyal. They bought shelve space in different
departmental stores to attract the customers. They tried to reach each group of people in which
they have succeeded.

MARKETING MIX

PRODUCT:
Nestle is well known for its rendered services in food sector. Nestl has recognized the special
nutritional requirements which start from infants and covers the range to all age groups. They
add specific nutrients to milk and encourage children to consume nutritious
Products with different flavors, colors and shapes. For small children, and families, Nestl offers
smaller sizes and portion able packs. Nestle milk and dairy products are recognized throughout
the world.
PRICING
Nestle has its own set of techniques for setting the prices of the product. It does not primarily
focus on the competitors pricing strategies. It emphasizes on the market demand of the product.
The prices of the products are also subjected to the type of consumer product. If the product is a

daily use then it can have a minimum price to attract the customer towards your product. Thus
the company cannot influence much on the prices.
PLACE
Nestles products are available at every corner of the country regardless of rural or urban areas.
PROMOTION
The following are some of the promotional strategies used by Nestle for market expansion,
New consumption opportunities for chocolates and confectionery were identified and
developed in areas like railway platforms, college canteens and major events.
Nestle set up Caf Nescafe and Coffee Cornersacross metros and mini-metros.
It also uses other below line activities to promote its product like by using the
Following techniques:

Free sampling

Door to selling

Prizes

DISTRIBUTION:
The distribution comprises of six branches located in Calcutta, Delhi, Mumbai, Chennai,
Bangalore and Chandigarh. The distribution network functions efficiently with the transfer of
goods from the factories to the Mother Godowns, which in turn are transferred to the clearing
and the sales agents. The C&S agents sell it to the cash distribution that makes the secondary sale
in the market.
Distribution Situation:
Company is using 2 channels for distribution,

Retail outlets (indirect channel)

Sales promotion officers