Nestle S.A. Nestle S.A. Nestle S.A. is a Swiss multinational food and beverages company headquartered in Vevey, Switzerland. Nestle has 468 factories in 86 countries around the world and around 330 000 employees. Nestle has more than 2000 local and global brands. Largest food company in the world, measured by revenues.
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Nestle S.A.Nestle S.A.
Nestle S.A. is a Swiss multinational food and beverages company headquartered in Vevey, Switzerland.
Nestle has 468 factories in 86 countries around the world and around 330 000 employees.
Nestle has more than 2000 local and global brands.
Largest food company in the world, measured by revenues.
TIMELINE TIMELINE
Refrigerated FoodsRefrigerated Foods
In the Prepared Dishes and Cooking Aides line, they planned to introduce the refrigerated foods category in the U.S. market
7% of their global sales came from refrigerated foods in the European market.
Attempt to enter through a pudding dessert product but pre-empted by Jell-O.
The next step was the “Ethnic Foods” category with refrigerated pasta and sauces.
LambertLambert’’s Pasta and s Pasta and CheesesCheeses
The time taken for internally developing refrigerated pasta would take away their advantage.
Thus they started by purchasing Lambert’s Pasta and Cheeses, a small New York based Pasta company in 1987.
They purchased the $15 million revenue company for $56 million.
Refrigerated PastaRefrigerated Pasta
Pasta available in the U.S. market either as fresh pasta in gourmet restaurants or as dry pasta in “ethnic foods” aisles in grocery stores.
Refrigerated pasta was branded under Carnation’s Contandina brand as it was associated by the market with authentic Italian food.
The Contandina Pasta & Sauces was highly successful growing to more than $100 million in sales by 1990.
Refrigerated PizzasRefrigerated Pizzas
Following the success of the refrigerated Pasta line and the possible tapering off of sales in the refrigerated foods market, Nestle contemplated launching refrigerated pizzas.
They planned to launch it under the Contadina brand name as people recognized that brand.
This case considers the possible launch of refrigerated pizzas.
Product Lines Of Nestle
ContadinContadin
a a Pizza Pizza
!!!!!!
BRAND BRAND
EXTENSION..!!EXTENSION..!!
Idea GenerationIdea Generation
Success of Pasta-$100 million sales by 1990.
Pasta- New companies entered (Kraft).
Ethnic similarity between pasta and pizza.
Target $18.4 billion pizza market which did not have refrigerated foods.
76% of all US families had eaten in last 6 months.
60% pizza taken at home.Frozen pizza market-No clear market leader.Available in 6”,8”,12” size. 75% going for 12”.10,000 pizza restaurants, 25000 other outlets.
• Separate Packets• 12” pizza- $6.40• $1.30 extra toppings
• Heat and Eat• Variants1)Italian
Pepperoni2)Italian sausage3)Italian Three-
cheese4)Italian
Mushroom• 12” pizza-
$7.60
Product Development Product Development [Contd.][Contd.]
• Next Step-Test of two concepts• Find interest in new offerings• 58% showed interest in kit• 42% in pre assembled pizza• R&D investigated and indicated that pre-
75% of pizza consumption at home was delivered/takeout pizza
There is always the cheaper frozen pizza that can be cooked at home but requires de-freezing before heating
Promotion criteriaPromotion criteria
Promotion strategiesPromotion strategies
Leverage the successful Pasta platform, Contadina brand
Capitalize on the growing Italian food market segment
DistributionDistribution
• NRFC has a highly efficient distribution system for transporting refrigerated products
• Using brokers to sell rather than relying on the traditional sales force
12 inch pizza cheese
Pizza KitPizza Kit
ToppingsToppings
Italian Sausage Italian 3 Cheese Italian Mushroomand bell pepper
Italian Pepperoni
PackagingPackaging
Competition(Presumed)Competition(Presumed)
RecommendationsRecommendationsThe simulated test result shows that the users rated
delivered pizza over the refrigerated pizza. The new product was pitted directly against the
delivered/take away category. No data proves that there was a latent demand for
refrigerated pizza. The decision to enter the market with refrigerated pizza solely based on a market research conducted by the competitor Kraft Foods.
The new product has no value proposition to attract newer customers. The only means of becoming profitable was to eat into the existing market share of delivered pizza..
What happened actuallyWhat happened actually
• 1991-Nestle launched Contadina Pizza as a quick, convenient, yet fresh alternative to frozen pizza.
• Pizza introduced in a kit format composing of a 12 inch refrigerated pizza shell, packed together with separate pouches of cheese and sauce.
• Pizza kit was priced at $6.19• Toppings were priced at 1.49
• Company faced disappointing results by not meeting any targets
• Tried to improve the advertising themes by testing three more ads.
• All these ads also failed in terms of recall.
• Company maneuvered with price promotions but failed in this aspect
What happened actually What happened actually [Contd.][Contd.]
• Abandoned the toppings • Sold pepperoni and cheese kit and a
cheese kit at $5.99 and $5.49 respectively
What happened actually What happened actually [Contd.][Contd.]