Nestle's International Strategy

Introduction

Every corporate story has its own character... In the case of Nestlé's ice cream market endeavors, it is the present CEO of Nestlé Group - Mr. Peter Brabeck-Letmathe.

Back in 1991, when he was the Head of the ice cream / confectionery business, the company had its ice cream operations in just ten countries around the world. Mr. Brabeck faced a strategic dilemma: to build a solid presence in this sector or to make a better use of resources elsewhere in the company (Pictet). Being a person who is not used to give up in the face of a challenge, Mr. Brabeck chose the first option and succeeded, developing among others "the unique branding policy of Nestlé, characterized by a strict hierarchy of strategic brands on the global, regional and local level" (Nestlé "Peter Brabeck-Letmathe").

Ice cream is not an accidental choice...

Nestlé has already been number one food company in the world with paramount leadership in chocolate, confectionery and soluble coffee markets. Consequently, an active entry to another food sector would allow the company to use its accumulated expertise; in the case of ice cream - years of experience in milk and frozen food sectors. Marketing know-how and unique branding strategies could have been profitably used to extend the confectionery lines to ice-cream products and offset decreasing summer sales (Datamonitor Industry Market Research).

The industry analysis has reassured Mr. Brabeck's position. The ice cream market proved to be very attractive as one of the biggest food sectors in the world comparable in size to pet care, fifty percent bigger than breakfast cereals and twice as big as soluble coffee with steady annual growth estimated at 3%. Accordin...

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... have given Nestlé tremendous advantages in market penetration, brand portfolio, product differentiation and distribution channel. This allowed the company to quickly become one of the world's leaders on the ice cream market.

As Nestlé still has strong competitors in this industry, we have explored the main differences between Nestlé and its major rival Unilever in market shares on global and regional basis, marketing strategies, R&D and profitability.

The analysis has shown that Nestlé still needs to improve its profitability; carefully consider all the risks and costs of integrating the acquisitions and be aware of contingencies that may impact the operations. Nevertheless, we think that the company's strategy has already proved to be successful, making Nestlé strong number two worldwide and the first ice cream company in the USA.