Business Model of the largest food and beverage company : Nestlé

Sarika Anand Sarika Anand
Nov 12, 2020 7 min read
Business Model of the largest food and beverage company : Nestlé

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Nestlé is the world’s largest food and beverage company,  in terms of revenue. It is a Swiss Company established in 1866 by Henri Nestlé. While its main foray is foods and drinks, it has hundreds of other products as well.

It is present in 187 countries around the world, and its 291,000 employees are committed to Nestlé’s purpose of unlocking the power of food to enhance quality for everyone, today and for generations to come.

Nestlé - Company Highlights

Startup Name Nestlé
Headquarters Vevey, Vaud, Switzerland
Industry Food processing
Founder Henri Nestlé
Founded 1866
CEO Ulf Mark Schneider
Areas served Worldwide

Nestlé - About and How it works?
Nestlé - Founder and History
Nestlé - Logo and it's meaning
Nestlé - Mission
Nestlé - Business Model
Nestlé - Growth and Revenue
Nestlé - Investments
Nestlé - Acquisitions
Nestlé - Competitors
Nestlé - Challenges Faced
Nestlé - Future Plans

Nestlé - About and How it works?

Nestlé is a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the world, measured by revenue and other metrics, since 2014.

Nestlé's products include baby food, medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of Nestlé's brands have annual sales of over 1 billion CHF (about US$1.1 billion), including Nespresso, Nescafé, Kit Kat, Nesquik, Stouffer's, Vittel, and Maggi. Nestlé has 447 factories, operates in 189 countries, and employs around 339,000 people. It is one of the main shareholders of L'Oréal, the world's largest cosmetics company.

Nestlé - Founder and History

Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri Nestlé.

Founder of Nestlé
Founder of Nestlé

Nestlé's origin dates back to the 1860s, when two separate Swiss enterprises were founded that would later form Nestlé. In the following decades, the two competing enterprises expanded their businesses throughout Europe and the United States.

In 1866, Charles Page and George Page, brothers from Lee County, Illinois, USA, established the Anglo-Swiss Condensed Milk Company in Cham, Switzerland. The company's first British operation was opened at Chippenham, Wiltshire, in 1873.

The company grew significantly during the First World War and again following the Second World War, expanding its offerings beyond its early condensed milk and infant formula products. The company has made a number of corporate acquisitions, including Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971, Rowntree Mackintosh in 1988, Klim in 1998, and Gerber in 2007.

Nestlé - Logo and it's meaning

Nestlé has modified its logo at least six times throughout its more than 150-year history.

Nestle's current logo
Nestle's current logo

Since the very first logo, introduced in 1866, the visual identity concept of the famous Swiss company has been based on the family name of its founder, Henri Nestle, which translates from German as “The Nest”.

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Nestlé - Mission

Nestle's mission statement says,"Good Food, Good Life" which is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.

Nestlé - Business Model

Nestlé is a powerhouse of consumer brands spanning across baby foods, bottled waters, powdered drinks, cereals, coffee, drinks, pet-care, and more. The company made almost $92 billion in 2018, with high margins on its powdered and liquid beverages (coffee, cocoa, and malt beverages and tea categories).

A spokesperson for Nestlé said, "As the ‘Good Food, Good Life’ company, we enhance quality of life and contribute to a healthier future. Winning with consumers is the source of our sustainable financial performance and our way to earning trust and maintain our market leadership. Based on a compelling Nutrition, Health and Wellness strategy, our company delivers sustainable value over the short term and the long term."

In short, Nestlé focuses on generating demand for its current brands, while improving its operational efficiency, and by allocating massive amounts of capital to buy and sell relevant consumer brands, which help the company to keep its dominance in the consumer food and beverage industry.

Nestlé - Growth and Revenue

Nestle SA revenue for the twelve months ending June 30, 2020 was $0M, a NaN% increase year-over-year.

Year Annual Revenue Percentage change
2019 $93.469B -0.36%
2018 $93.805B +2.42%
2017 $91.59B +0.47%

Nestlé - Investments

Nestlé has made 7 investments. Their most recent investment was on Nov 9, 2020, when Prometheus Biosciences raised $130M.

Date Stage Amount Organization Name
Nov 9, 2020 Private Equity Round $130M Prometheus Biosciences
Jul 20, 2020 Venture Round €110K Foodcloud
May 1, 2018 Grant $150K Mumm
Jun 20, 2017 Series C $77M Freshly
Dec 7, 2004 Funding Round - Wagner Tiefkühlprodukte
Oct 1, 2002 Funding Round - SAPHIR

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Nestlé - Acquisitions

Nestlé has acquired 30 organizations. Their most recent acquisition was Mindful Chef on Nov 8, 2020.

Acquiree Name Announced Date Amount Transaction Name
Mindful Chef Nov 8, 2020 - Mindful Chef acquired by Nestlé
Freshly Oct 30, 2020 $950M Freshly acquired by Nestlé
Yinlu Jun 28, 2018 CN¥50M Yinlu acquired by Nestlé
Wamiz Mar 1, 2018 - Wamiz acquird by Nestlé
Terrafertil Feb 9, 2018 - Terrafertil acquird by Nestlé
Atrium Innovations Dec 5, 2017 $2.3B Atrium Innovations acquird by Nestlé
Chameleon Cold-Brew Nov 3, 2017 - Chameleon Cold-Brew acquird by Nestlé

Nestlé - Competitors

The top 10 competitors in Nestlé's competitive set are Mondelez International(Food Processing industry, Mondelez International has 211,000 fewer employees than Nestlé), Kellogg's(Kellogg's has 260,000 fewer employees than Nestlé), Mars(Mars generates $48.8B less revenue than Nestlé), Hershey, Kraft Heinz, Unilever, Danone, General Mills, PepsiCo, Keurig Dr Pepper.

Nestlé - Challenges Faced

  • Maggi was the most popular instant noodles brand in India, which children in particular loved to snack on. The brand had a dominant position until suddenly in mid-2015 it got engulfed in controversy. Several state food regulators found that Maggi contained monosodium glutamate as well as lead well above the prescribed limits which were harmful especially for children. When Nestlé India was confronted with lab test results, it stuck to its position that they had a world-class quality control process in place and that their products were safe for consumption. Finally, the national food regulator FSSAI, ordered a ban on the sale of Maggi including product recall. Consequently, several state governments imposed temporary ban on the sale of Maggi noodles in their respective states. The future of the company suddenly looked very bleak.
  • Critics have accused Nestlé of discouraging mothers from breastfeeding and suggesting that their baby formula is healthier than breastfeeding, despite there being no evidence for this. This led to a boycott which was launched in 1977 in the United States and subsequently spread into Europe.
  • Multiple reports have documented the widespread use of child labour in cocoa production, as well as slavery and child trafficking, throughout West African plantations, on which Nestlé and other major chocolate companies rely. According to the 2010 documentary, The Dark Side of Chocolate, the children working are typically 12 to 15 years old. The Fair Labour Association has criticized Nestlé for not carrying out proper checks.

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Nestlé - Future Plans

Food and nutrition major Nestle India plans to focus on core categories, including milk & nutrition, chocolates & confectionery and coffee & beverages to explore growth and expansion opportunities in these segments. In accordance with long-term goals that are committed in support of the UN plan for sustainable development by 2030, the company Nestlé by the end of 2020 is reduced sugar in Nestlé confectionery products by 5%, which means that only in Europe, there will be removed at least 18,000t of sugar from the products. Salt in products will be reduced for 10% and all the artificial colour.

The company will add at least 750 million rations vegetables, 300 million rations of nutrient-rich ingredients such as cereals and legumes, and more nuts and seeds. There are 42 Nestlé social obligations to be achieved by 2020, the progress that the company has so far recorded, as well as future plans, which are items that make Nestlé ranked in the top of the Dow Jones World Sustainability Index (DJSI World), which measures global companies in terms of impact in the field of sustainable development.

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