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Nestle China'S "Addition And Subtraction Method"

2021/4/29 12:25:00 0

Addition And Subtraction

On April 27, Nestle signed a contract with Laixi municipal government of Qingdao, Shandong Province, and announced a series of new investments, including the establishment of a product innovation center, the production of new products of Jiabao fruit paste, the expansion of production capacity and the further promotion of sustainable development, involving the major businesses of infant supplementary food, coffee and dairy products.

In the past two years, Nestle has further adjusted its business, opening up the "selling and selling" mode in the world, and constantly adjusting its investment strategy in China. Last year, Nestle divested China's drinking water assets and pulled out of the Yinlu brand.

"At present, China has entered a new stage of development, and Nestle is full of confidence in China and Qingdao market." Nestle Greater China Chairman and chief executive officer Rosedale said at the signing ceremony.

According to the latest financial report, Nestle's total sales volume in the first quarter of this year was 21.1 billion Swiss francs (about 149.555 billion yuan), the largest quarterly growth in ten years, with organic growth of 7.7%, including the actual internal growth rate of 6.4% and the pricing contribution of 1.2%. Among them, China's market has achieved double-digit growth.

At present, China is Nestle's second largest market in the world. More than 90% of Nestle's products sold in China are produced locally. Yang Xuxiang, vice president of Nestle infant nutrition business unit in mainland China, told 21st century economic reporter that Shandong, as a major fruit and vegetable Province, plays an important role in Nestle's localization strategy. She predicted that in the future, with Nestle gradually realizing the complete localization of raw materials, it is expected to bring strong growth opportunities to the Garbo brand.

Zhu danpeng, an analyst of China's food industry, told reporters that in recent years, the investment strategies of the world's top 500 have changed a lot“ In the past, the investment logic of the world's top 500 companies was mainly based on three aspects: high technology, high profits and sustainable development. " In Zhu danpeng's view, Nestle's layout in China also conforms to the above characteristics.

Extra organic food

It is understood that one of the highlights of Nestle's new investment project is Jiabao fruit paste project. According to the plan, Nestle will set up a factory with capacity of Jiabao brand wet products in Laixi, Qingdao, and comprehensively optimize the production line of infant supplementary food project. The annual maximum output of the automatic filling production line can reach 4800 tons.

With the continuous decline of domestic birth rate in recent years, infant market has changed from incremental market to stock market, and major food giants are looking for new breakthroughs.

According to relevant data, from 2017 to 2019, the growth rate of formula milk powder sales in China gradually slowed down. In sharp contrast, the growth rate of complementary food and complementary food mud was much faster. Among them, the sales volume of auxiliary food mud has achieved a compound annual growth rate of 20%, and the overall sales volume is expected to reach 1.23 billion yuan in 2021; At the same time, the market penetration rate of China's supplementary food mud is only 26% in 2019, which still has great potential for improvement.

According to the recommendations of the Chinese infant balanced diet pagoda, infants aged 7-12 months should take 25-100g fruits and vegetables daily. Proper intake of fruit can not only supplement vitamins, but also help baby intestinal moist. However, according to Nestle research data, there are still nearly 50% of Chinese baby's daily intake of fruits and vegetables does not meet the recommended amount.

"At present, Chinese society is still in the process of understanding the category of complementary food, so we should not only work on products, but also vigorously promote education, consumer activities, sharing complementary food knowledge and scientific feeding methods." Yang Xuxiang told reporters of the 21st century economic report. At the same time, Nestle also plans to work with relevant government departments to develop new categories of complementary food standards for infants and young children, and promote the development of complementary food market categories.

Promoting local innovation

Another important content of Nestle's new investment project is liquid products. Next, the management department of Nestle coffee ready to drink products will officially settle in Qingdao, taking Qingdao as the new base. At the same time, Nestle will set up an innovation center to develop ready to drink coffee, liquid dairy products and other liquid products in the region, so as to further expand the procurement of local milk sources.

Data shows that Nestle has invested in coffee production in Qingdao factory since 2011. At present, the main products of Nestle Qingdao factory are: Eagle mark condensed milk, ultra-high temperature sterilized milk, light condensed milk (Nestle three brands), etc.

Ready to drink coffee is an important part of Nestle coffee's business in China, and it is also the most widely used coffee series in China. Nestle coffee ready to drink coffee management department in Qingdao, will be mainly responsible for the management of local processing plants and product sales.

In recent years, driven by the accelerated pace of life, the quality improvement of instant coffee products and the transfer of target consumer groups, instant coffee has become the most eye-catching category in the coffee market. Euromonitor forecasts that China's ready to drink coffee market will reach 14.9 billion yuan in 2021, and the global ready to drink coffee market is expected to grow to $3.1 billion in 2022, faster than bottled water and soft drinks.

In this context, categories such as Nestle, kraft, Suntory, Tongyi, Master Kang, Starbucks, Kirin and other categories have accelerated the layout. According to Euromonitor data, Nestle has a 55.5% market share in this category, followed by Suntory, accounting for 14.1%. Both uni president and Kirin have single digit market shares.

Zhu danpeng said that since 2019, China's coffee market has entered a multi brand, multi scene, multi-channel and multi-user diversified node. Different consumer groups choose different types of coffee consumption products and scenes according to their own needs“ At present, there are six different levels, including super high-end, high-end, medium and high-end, middle-end, low-end and low-end. The whole coffee market will be in a high-speed development stage in the next three years. " Zhu danpeng believes that Nestle's layout in Qingdao is to further consolidate its advantages in the field of coffee.

It is understood that "localization" will be the key direction of product innovation center. According to Nestle, the innovation center has officially settled down in Qingdao with six independent research and development patents, and will explore and develop more new liquid products by utilizing the industrial capacity of existing factories to produce liquid products“ Based on the sharing of Nestle's global R & D technology, the innovation center will carry out localized innovation according to Chinese national standards and consumer demand, realize the two-way customized nutrition design and taste development, and create a product lineup more suitable for the Chinese market. "

In addition, in terms of raw materials, Nestle will further expand the procurement of raw milk, and Laixi municipal Party committee and government will use the mode of "financial leasing + performance guarantee" to solve the funding gap of large-scale dairy cattle purchase“ In the future, the supply gap of Nestle's milk supply will be narrowed after the new dairy cows are purchased Nestle said.

"Addition and subtraction"

Since 2017, under the current CEO Snyder's operation, Nestle has further sorted out its businesses. On the one hand, it has stripped off non core businesses and businesses with limited profitability, on the other hand, it has acquired and invested in businesses with high growth and in line with the overall requirements of the group.

Nestle disclosed in its 2020 annual report that since 2017, the total income of Nestle's adjusted business has accounted for 18% of the total sales in 2017, including selling part of its drinking water business to Tsingtao beer in the Chinese market last year, and stripping the Yinlu peanut milk and Babao porridge business.

On August 28 last year, Nestle announced that it would sell its water business in mainland China to Qingdao beer group. The deal, which includes local brands "Dashan" and "Yunnan spring", and Nestle's three water business plants in Kunming, Shanghai and Tianjin, is believed to be Nestle's move to "withdraw from China's local water business and focus on the high-end drinking water market".

On November 25 of the same year, Nestle announced that it had agreed to sell Yinlu peanut milk and canned Babao porridge business to food wise, which was controlled by Chen Qingshui family, founder of Yinlu food group. The transaction included all shares of five Yinlu food group enterprises located in Fujian, Anhui, Hubei, Shandong and Sichuan, and Nestle retained the instant coffee business. The adjustment is seen as a follow-up to Nestle's strategic move to divest non high growth businesses.

Under the influence of the epidemic, Nestle's global sales last year totaled 84.343 billion Swiss francs, a decrease of 8.9% over the same period last year. Among them, the sales volume of Nestle Greater China in 2020 was 5.986 billion Swiss francs, which also showed a negative growth compared with that in 2019.

However, Nestle believes that the decline in revenue is mainly due to the continued appreciation of the Swiss franc, resulting in a 7.9% decrease in sales, and a 4.6% decrease in revenue due to the restructuring of Nestle's business in 2020. Excluding the above factors, Nestle's actual revenue growth in 2020 is 3.6%, which is also the highest in the past five years.

Focusing on the Greater China region where China is located, the growth mainly comes from coffee, infant cereal, seasoning food and ice cream. Last year, the business of infant formula milk powder in Greater China continued to decline, and the sales of core brands Wyeth S26 and illuma showed negative growth.

In this regard, Zhu danpeng believes that Wyeth's biggest problem is that the service depth is not enough, especially the coverage of the third and fourth tier cities. However, he believes that nestle will continue to adjust its organizational structure and brand strategy. "In recent years, it is not difficult to see that although Nestle is the largest food company in the world, its adaptability and transformation speed are still very fast. From the perspective of integrating Taitaile and Haoji, Nestle is also continuously adjusting its business in China.".

The reporter noted that in addition to the above-mentioned adjustments, Nestle also officially introduced its high-end water brand Puna into China last year, and increased pet food twice in the year. According to the new strategy put forward by the group before, Nestle "will strengthen its attention to the iconic international brand and the leading high-end mineral water brand, and invest in differentiated health products".

 

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