Nestlé targets innovation, localisation

05 April 2011

VEVEY, Switzerland: Nestlé, the food group, is using innovation and localisation to drive its future growth.

Speaking with Fortune magazine, Peter Brabeck, the firm's chairman, suggested a targeted model was vital to leveraging its core advantages.

"At the end of the day, every man and woman on this planet needs about 2,400 calories," he said. "But one of the big challenges that food and beverage companies face is that there is no global consumer."

Brabeck added: "Every single consumer in this world has his or her own idea about what she or he wants and needs. So you have to be decentralised.

"At Nestlé, headquarters has nothing to do with the taste of the pizza you're buying in the US. That's the responsibility of local management."

The Swiss multinational is on the verge of rolling out Nescafé Dolce Gusto in America, and Brabeck predicted this offering would yield $1bn (€703m; £620m) in revenues worldwide within the next three years.

"This is a business that we launched only three years ago. It's already earning more than half a billion today, and it's growing like crazy," he said.

Innovation is another area of focus, ranging from technologies for freeze-drying to "medical foods" such as those offsetting the impact of chemotherapy or gum for people with inflamed kidneys.

"These products are different, they have to be approved by the FDA, and you have to have clinical trials," Brabeck argued. "This is very serious. You start to enter completely different terrain.

"There are a lot of chronic diseases in which nutrition can either be additional help or can be preventive."

Abbott Laboratories was name-checked by Brabeck as Nestlé's biggest rival, and the latter firm is hoping to transfer its strengths covering marketing and consumer insights into this arena.

"We bring the understanding of the patient that pharma companies normally don't have - they think about molecules and things like that," he said.

Learnings from the food sector will also enable Nestlé to deliver products which are pleasing for the palate as well as serving physically beneficial purposes.

While this may potentially cause confusion among shoppers typically viewing Nestlé as a specialist in the confectionary field, Brabeck cited the Jenny Craig weight-loss range as an indicator.

"Who knows that Jenny Craig is Nestlé? It's a huge weight-management business, and it's doing very well," he said.

"Now, one day we might put the Nestlé brand more in front of Jenny Craig because it would help give our company something different."

Such fluctuating perspectives are also observable in various markets across the globe, due to distinct development patterns.

"In the US, there is no doubt that for a generation or more, everybody remembers, 'Nestlé makes the very best chocolate.' I think that it was a campaign from the 1930s," said Brabeck.

"But if you go to Latin America, for example, people think of Nestlé as more of a nutrition company. Why? Because the first products Nestlé launched in Latin America were infant nutritional supplements and milk powders."

Data sourced from Fortune; additional content by Warc staff