Publications
Publications
- November 2014
- HBS Case Collection
Nestlé SA, 2014
By: John R. Wells and Galen Danskin
Abstract
In 2014, Nestlé was the largest producer of packaged foods and beverages in the world. 2013 revenues were $103.7 billion and operating profits $16.1 billion (15.5% of sales). The company owned 29 mega brands, each generating more than Euro 1 billion ($1.25 billion). Based in Switzerland, Nestlé was one of the most global players in the sector, and more than a third of its revenues came from developing markets. Oxfam consistently ranked Nestlé number one in the world's top ten food companies for the way it addressed the issues impacting the lives of people living in poverty around the world.
Nestlé's size and social impact posed challenges for CEO Paul Bulke and his leadership team. To meet the company's target of 5-6% annual organic growth, the team needed to add over $5 billion in sales annually. Profitability was also an issue; although Nestlé's operating margins had been rising, they did not compare favorably with some of its major competitors. Meanwhile, pressures from the supply side included increasingly volatile material prices, demands for more supply chain security, and calls for ever-more social responsibility towards developing market suppliers.
Bulke did not see the need for major acquisitions to maintain the momentum at Nestlé. He had identified 4 platforms for organic growth: health, nutrition and wellness for all Nestlé products; a greater focus on emerging markets, providing good nutrition at affordable prices; out-of-home consumption in developed markets; and premiumization, luxury niche products commanding brand premiums and higher margins. Would this be enough to sustain Nestlé's long record of success?
Nestlé's size and social impact posed challenges for CEO Paul Bulke and his leadership team. To meet the company's target of 5-6% annual organic growth, the team needed to add over $5 billion in sales annually. Profitability was also an issue; although Nestlé's operating margins had been rising, they did not compare favorably with some of its major competitors. Meanwhile, pressures from the supply side included increasingly volatile material prices, demands for more supply chain security, and calls for ever-more social responsibility towards developing market suppliers.
Bulke did not see the need for major acquisitions to maintain the momentum at Nestlé. He had identified 4 platforms for organic growth: health, nutrition and wellness for all Nestlé products; a greater focus on emerging markets, providing good nutrition at affordable prices; out-of-home consumption in developed markets; and premiumization, luxury niche products commanding brand premiums and higher margins. Would this be enough to sustain Nestlé's long record of success?
Keywords
Consumer Products; Acquisitions; Strategy; Goods and Commodities; Nutrition; Emerging Markets; Corporate Social Responsibility and Impact; Competitive Strategy; Consumer Products Industry; Europe
Citation
Wells, John R., and Galen Danskin. "Nestlé SA, 2014." Harvard Business School Case 715-428, November 2014.