Nestlé taps new trends

14 February 2012

VEVEY: Nestlé, the Swiss food group, is attempting to tap favourable trends in areas like ecommerce, product customisation and luxury, and thus find new models for growth.

The firm is pursuing such a strategy with Maison Cailler, a high-end chocolate brand. Shoppers accessing a dedicated website can fill in details to determine an individual "chocolate personality" and have a box of treats made up to meet their tastes.

At present, Maison Cailler's internet service will be available in Switzerland and Liechtenstein. Laurent Freixe, Nestlé's zone director, Europe, told Bloomberg it reflects emergent market realities.

He said: "It may sound counter-intuitive, but what's happening in the crisis is a quest by consumers for value, for more affordable products, but also for products that overtake their expectations ... What is squeezed in the middle is mainstream products.

"The big objective is to make it sustainable, make it something which will enter into consumption habits and which will not be just a one-off."

Mintel, the insights provider, has estimated that the premium chocolate category – featuring companies like Lindt & Spruengli – is worth around $8bn per year, with revenues rising at a rapid pace.

Nestlé has seen some previous success in the high-end sector, as shown by Nespresso capsules and machines, which gave it a lead position in the luxury at-home coffee segment.

When it launched in 1986, Nespresso, now valued at $3.3bn a year, was sold in just two markets, before going on sale online during the 1990s and reaching select bricks and mortar stores in 2002.

It is on offer in 250 boutiques today, and derives roughly 50% of returns from the web. Nestlé's BabyNes and Special.T tea pods have, more recently, employed a similar approach.

"Ecommerce is still new territory for Nestle," Jean-Philippe Bertschy, an analyst at Bank Vontobel, said. "Nespresso is the best example of it so far for them and they're also doing some with other brands, but these are still new experiments for them."

Currently, a modest 8% of Maison Callier sales are generated from outside Switzerland. Nestlé will introduce it in nearby countries either later this year or in 2013, although it may face stiff competition.

"Nestle is a strong player in the mass-market, but in the premium segment it doesn't have a strong reputation," Patrick Hasenboehler, an analyst at Bank Sarasin & Cie, added.

Data sourced from Bloomberg; additional content by Warc staff