Nestlé India Ltd COMPANY ANALYSIS REPORT
Nestlé India Ltd - Hot Drinks - India
Strategic Direction
·
In order to counter the tough
competition in other hot drinks, Nestlé India is expected to launch Milo in an
RTD format as well as widen Milo’s target audience beyond children through new
variants. The company is well positioned to tap into the growing coffee market
in India in the forecast period, with a focus on increasing product trials by
expanding its vending machines in the country. Unlike Hindustan Unilever,
Nestlé India is not expected to make a push in speciality coffee as it focuses
on educating consumers about basic coffee through its vending machines and
cafés at affordable prices.
Key Facts
|
Full name
of company:
|
Nestlé
India Ltd
|
|
Address:
|
Nestlé House,
Jacaranda Marg, M Block, DLF City, Phase II, Gurgaon 122 002, Haryana, India
|
|
Tel:
|
+91 (124)
2389 300
|
|
Fax:
|
+91 (124)
2389 411
|
|
www:
|
www.nestlé.in
|
|
Activities:
|
Packaged
Foods, Coffee and malt-based hot drinks
|
Source: Company website
|
|
2005
|
2006
|
2007
|
|
Net sales
|
Rs24,769
|
Rs28,161
million
|
Rs35,044
|
|
Net profit
|
Rs3,096
million
|
Rs3,151
million
|
Rs4,138
million
|
Source: Company reports
Note: Year end December
Company Background
·
Nestlé India Ltd, a 54%-owned
subsidiary of Nestlé SA, is a leading manufacturer of packaged food in India,
having had a presence in the country for over 40 years.
·
In addition to hot drinks, the
company also operates in packaged foods. The company’s products are classified
into milk products and nutrition, beverages, prepared dishes and cooking aids,
and chocolate and confectionery.
·
The company has national
coverage with nationwide manufacturing and distribution facilities.
·
It is publicly listed and is
not known to be looking for funding to realise its growth strategies.
Production
·
Nestlé India has six factories
across the country. The plants are located at Moga and Samalkha in North India,
Nanjangud and Choladi in South India and at Ponda and Bicholim in West India.
Alongside its own production facilities, the company also has tie-ups with
other manufacturers which contract manufacture Nestlé’s products.
·
In 2006, Nestlé India set up
its seventh factory at Pant Nagar in Uttarakhand. Located in a zone where the
company benefits from tax concessions, the plant will produce the company’s
culinary products. Nestlé continued to upgrade its production facilities in
2007 with the addition of new production lines and technology at its existing
plants.
·
The company exports to
neighbouring markets as wells as to Russia, Australia and South Africa. Export
sales during 2007 of Rs3,298 million, equated to an increase of 18% over 2006.
·
The company is not known to
undertake third party manufacturing
|
Location
|
Brand
|
Annual
production
|
|
All
|
All-Beverages
|
24,951
metric tonnes
|
Source: Company reports
Competitive Positioning
·
Nestlé India is the fourth
largest hot drinks player in India, with a share of 7% of the off-trade value
sales in 2008. The company is the leader in coffee with its twin brands Nescafé
Classic and Nescafé Sunrise. While Nescafé Sunrise is a low-priced
chicory-blended coffee mainly sold in South India, Nescafé Classic is popular
in the rest of the country.
·
The company’s share of coffee
as well as other hot drinks has been growing over the review period. The
company has set up a number of cafés throughout the country at shopping malls
and transit points and also installed vending machines in institutions, which
have helped to grow the awareness of coffee and Nescafé among consumers. Its
malt-based drinks brand is also witnessing some growth, albeit from a smaller
base than leading brands such as Bournvita and Horlicks.
·
Although the company is
positioned in the very dynamic malt-based drinks category, it has not been able
to leverage Milo’s nutritional positioning to substantially grow its share of
the category. While coffee is also a high growth market, the category is not
very dynamic and the company has shied away from introducing new flavours and
formats.
·
Nestlé has only one brand in
other hot drinks and three coffee brands under the Nescafé umbrella.
·
The company is positioned only
in the premium and mid-priced segments in hot drinks.
·
With no new product launches or
brand repositioning in the later part of the review period, Nestlé is not
considered an innovator in hot drinks.
|
Product
type
|
Value share
|
Rank
|
|
Coffee
|
37%
|
1
|
|
Other hot
drinks
|
7%
|
3
|
Source: Euromonitor International
