Nestle Company Information

Part
01
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Part
01

Nestle Advertising Spend by Channel - US

After an extensive search, we were unable to find Nestle's advertising spend for television and radio in the United States. However, we discovered that Nestle spent US$633.4 million on paid media (any form of paid advertising on the Internet) in the US in 2017 and US$152 million on print expenses.

Digital/Online Platforms (Social Media and Website)

Nestle Advertising Spend By Print

Helpful Findings


Research Strategy:

We began by going through global organizations that provide analytical data for various countries of the world in a bid to find the breakdown of Nestle advertising spend by channel in the United States for television and radio.

Globally

We came across Statista report which only stated that 2017, Nestle spent US$7.2 billion on global advertising efforts without giving details on the breakdown of Nestle advertising spend by channel. As such, we could not find the breakdown of Nestle's advertising spend by channel in the US for television and radio.

Regionally

Statista still stated only that regionally Nestle invested US$2.2 billion in advertising in the US. Therefore, we were unable to find data on the breakdown of Nestle advertising spend by channel in the US for television and radio.

Media Radar

We checked Media Radar’s Top Advertisers Lists which controls large ad budgets and are great prospects for media and ad tech companies. This stated only that "Nestle spent under $100 million on advertising in digital, print, and national TV in the last year." This effort was futile as it did not give a breakdown of Nestle advertising spend by channel in the United States for television and radio.

Triangulation

With the lack of information, we were unable to triangulate an answer for the breakdown of Nestle advertising spend by channel in the US for television and radio As such, we concluded that the required data is not available in the public domain.
Part
02
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Part
02

Nestle Advertising Spend by Channel - Global

While data on Nestle's global advertising spend broken down by channel is unavailable, the company's total spend on internet advertising was estimated at $119.5 million, and its overall advertising spend in 2017 was $7.2 billion globally.

Helpful Findings


Research Strategy

To understand Nestle's global advertising spend broken down by channel, we started by extensively searching media, industry reports, statistics databases, and market research reports for data on the company's advertising spend by channels. We searched sources such as Forbes, Business Insider, Statista, Financial Times, Wall Street Journal, Market Research, among others. While we were able to find some relevant data such as the company's total global advertising spend which we have reported above, we were unable to find a breakdown of global advertising spend by channels.

Next, we analyzed the company's annual report for 2018 and 2017 in a bid to find the breakdown. While the company stated that they are "embracing the opportunities offered by the digital transformation across marketing, social media and e-commerce", the company didn't mention the exact amount they are spending on those platforms.

Next, we decided to search for the company's total spend on advertising in each of the key platforms separately. We searched for the company's advert spending on television, radio, print, and digital/online platforms separately, but we were unable to find the data either. We only found data on the company's spend on Internet advertising in 2013 which we have also highlighted above.

We also attempted to triangulate the data by searching for the percentage of the company's advertising budget or revenue that is spent on either television, radio, print, and digital/online platforms. The goal was to use the data on the percentage of the company's revenue or budget dedicated to each of the channels to multiply the company's advertising budget or revenue in other to obtain a breakdown of advertising expenses per channel. However, we were unable to find the data on the percentage of the company's advertising budget or revenue that is spent on either television, radio, print, and digital/online platforms after searching sources already mentioned above.

Given that we were able to find data on the company's 2013 internet advert spending, we attempted to find older data on the company's spend on the various channels. Our goal was to also search for the company's revenue in whichever year we were able to find and then divide the total advert spend in the channel by the total budget in order to get the proportion of the company's overall revenue spend on the channel. We can then assume that the proportion has remained the same over the years and estimate current advert spend on the channel using the company's 2018 revenue and the estimated proportion data. However, we were only able to do this for the company's Internet advert spend as the other channel breakdown is behind a paywall. Hence, we have reported relevant findings above.
Part
03
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Part
03

Nestle Subsidiaries Advertising Spend - US

Information on advertising spends of 4-5 of Nestle's subsidiaries in the United States is not publicly available. A possible reason is that Nestle collectively reports on its ad spending as consolidated amounts of all the subsidiaries. A set of helpful insights has been included in the section below.
  • Nestle spent about $633 million on paid media efforts in the U.S. alone in 2017, according to Ad Week. That was down from about $700 million in 2016.
  • Nestle's ad expenditures in the country considerably increased in 2018. Statista estimates that Nestle invested $2.2 billion in advertising in the United States in that year.
  • According to AdAge, Nestle's U.S. media spending on Gerber fell 10.9% to nearly $76 million in 2016.
  • Media Radar estimates that Nestlé Stouffer's spent under $100 million on advertising in digital, print, and national T. V last year.
  • Additionally, Media radar estimates that Nestlé's Coffe Mate spent $100 million on advertising in digital, print, and national T.V.

RESEARCH STRATEGY

We could not find the advertising spends of 4-5 of Nestle's subsidiaries in the United States.
To find the advertising spends of Nestle's subsidiaries in the United States, we began by scouring through some official subsidiaries' websites such as Gerber (unavailable), Nesquick, chocapic, Nescafe, Smarties, Carnation, Coffe-Mate, and Stouffer's, for any of their financial statements on annual reports. The logic behind this strategy was to find the marketing spending in the U.S. of the Nestle subsidiaries. The strategy proved futile as it provided no relevant insights. We only found financial statement reports from Nestle from 2017 to 2018, but these reports had a global focus, with no specific information about the subsidiaries' ad spend. The official websites of the subsidiaries provided no financial statements since they all belong to the Nestle Group, which englobes all the financial information of all of their brands.

As an alternative strategy, we searched for the advertising spends of Nestle's subsidiaries in the United States by reviewing marketing/advertising databases sites such as Media radar and e-marketer, among others. With this strategy, we hoped to find the estimated ad spending of the Nestlé brands. Although we found information about the ad spending in U. S dollars of brands like Stouffer's or Coffee-Mate, the data points were just general estimations of ad spending. The same has been included in the helpful finding section of this brief.

We also searched for more specific information such as the percentage of ad spending by brands in the U.S., among other metrics to triangulate the answer using data of the global financial statement and articles from trusted media sites. Although we found relevant data about the total ad spend in the U.S. or the percentage of sales in the U.S. and the percentage of sales of some important Nestlé brands, there was not enough information specific to the ad spending of each brand that could be used to fulfill this assignment.

Finally, we changed tactics to search for articles in trusted media sites of the CEO's or CMO's declarations or press releases. Our reasoning behind the strategy was that sometimes, companies release their own information through press releases or interviews with media sites. We hoped to find declarations mentioning their ad spend. We scoured through sites like Forbes, Ad Week, Ad Age, Investopedia, and others. However, these provided no insights because there were not available declarations of the CEO or CMO's of the subsidiaries. The only available statement was that of Gerber but was older than 24 months. The information has been added as part of the helpful insights.
Part
04
of seven
Part
04

Nestle Creative Marketing Campaigns

Four examples of creative marketing campaigns from Nestlé S.A. are the Cerelac, Cookie Crisp, Gerber Generations, and Nestlé Pure Life campaigns.

Cerelac

  • The Cerelac campaign's messaging focuses on the product providing a nutritionally balanced baby food, which incentivizes parents to purchase the product. The campaign's tagline is: "Because tomorrow starts today." The campaign's marketing channels are print and social media (e.g., Facebook and Twitter).

Gerber Generations

  • The central message of the Gerber Generations campaign is that the food babies ingest within their first five years can affect their health for the rest of their lives. This encourages parents to buy Gerber products for their children. The tagline for this campaign is: "Start healthy, Stay healthy [sic]."
  • The campaign's marketing channels are broadcast television, out-of-home advertising, and print.

Cookie Crisp

  • The message of the Cookie Crisp campaign is that the cereal provides a healthy yet flavorful breakfast. The campaign's tagline is: "Cookie Crisp, next time it is mine!" The campaign's marketing channels are YouTube and broadcast television.

Nestlé Pure Life

  • The objective of the Pure Life campaign's message is to inspire a future that brighter and healthier through the consumption of water. The campaign's tagline is: "Pure life begins now." The campaign's marketing channels are YouTube and other Internet videos.

Part
05
of seven
Part
05

Nestle Global Digital Marketing Strategy

Digital marketing mainly embraces the application of electronic gadgets and online platforms such as websites, emails, and social media handles to expose a product to a targeted consumer group. Nestle makes good use of these platforms to push its products out to the market, in return, achieving sales that translate to profits. This research seeks to analyze the digital marketing strategy employed by Nestle.

Direct to Consumer E-Commerce

  • Nestle has invested in creating a consumer database that has enabled them to deliver personalized products, messages, and services directly to consumers. At the moment 10% of all consumers contacts are personalized
  • The results were realized in 2018 as their e-commerce sales grew by 18% and reaching an overall of 7.4% of their total sales.
  • Other collaborations that involve the D2C E-commerce employed by Nestle are Convenience, Natural, Club Value as well as Specialty stores and Out-of-Home.

Mobile Marketing

  • Nestle has time and again collaborated with communication agencies to create 3D renders of their products and eye-catching animations to promote their products.
  • Global communications' agency Maxus and Adspruce have run an awareness campaign in Pakistan using their cutting edge rich media technology. This campaign has proved to be a success and has allowed Nestle to tap into the Pakistani customer base.
  • The campaign in Pakistan was mainly aimed at raising awareness about the new Nestle Pure Life brand identity.

Digital Acceleration Team(DAT)

  • Nestle has created a digital acceleration team whose main mandate is to vet potential advertising technology to find unique ways of digital advertising. This is to enable Nestle to stay relevant in the ever-changing dynamic world of digital advertising.
  • DAT is also charged with training employees on the digital side of the business. This ensures the employees stay relevant and updated on social media platforms to aid in digital marketing.
  • In addition to this, DAT is also involved in damage control and reputation management.
  • Nestle has an approximate 308,000 people around the world employed from 2008 to 2018. Let's assume all these employees decide to aid in social media marketing to their varied network then that outreach is enormous.

Social Networking

Brand Hooking

  • Nestle's chocolate bar, KitKat, has been in the recent past used by Google as a name for its mobile operating system. Google has a large worldwide following and the android system is used in equal measure. This strategy has served to promote the KitKat brand among android and users of Google products.
  • Google has more than 21.6M followers on Twitter and the launch of KitKat as a brand for their Mobile Operating System has had a vast media outreach.
  • Kitkat is now an iconic brand by Nestle present in more than 80 countries. With the establishment of Kitkat Chocolatory online, one can access an order, place it and even share or send it to a dear one.


Part
06
of seven
Part
06

Nestle Business Challenges

Two of Nestle's biggest business challenges are the lawsuit affecting their Poland Spring water brand, which can lead to a permanent injunction preventing them to sell water under current terms and the unhappy relationship with investors since 2017, where Daniel Loeb express his concerns about company growth.

1. Bottled Water Fraud

  • Nestle is facing a lawsuit over its Poland Spring water brand in the U.S. Consumers from eight U.S. states said that Nestlé defrauded them into overpaying for Poland Spring by labeling it as “100% Natural Spring Water” but according to them, not one drop came from a genuine spring.
  • Nestlé mostly sells “spring” water, rather than sparkling, purified, or mineral water. Nestlé understands that consumers in the US find greater cachet in spring water and they are willing to pay a premium.
Impact on the Company
  • Nestlé has continued to sell Poland Spring water, with annual revenues between $300 million and $900 million, the lawsuit is looking to prevent Nestle Waters from continuing to sell under the current terms.
  • According to the suit, the water is being drawn from wells in low-lying populated areas near potential sources of contamination; as stated, “If consumers knew … they would not buy, or would not pay premium prices for, Poland Spring Water products.”
  • The lawsuit is seeking an unspecified amount of compensatory and punitive damages.
Plans
  • Nestlé Waters argued that there was “no fraud” because their water met the state requirements. “We remain highly confident in our legal position and will continue to defend our Poland Spring brand vigorously against this meritless lawsuit,” a statement from the spokeswoman of Nestle Waters. “Poland Spring brand natural spring water is just what it says it is — 100 percent natural spring water.”
  • The company asked a judge to dismiss the lawsuit, or at least dismiss it in deference to the F.D.A.
  • In a statement given to Vox, a spokesperson from Nestlé Waters called the lawsuit “meritless” and said that the company will continue to fight it.
  • After the initial lawsuit was filed against Poland Spring in 2017, the company hired the law firm DLA Piper to do an independent investigation of its water. The law firm found that the water sources of the company “meet all FDA regulations defining spring water.”

2. Unhappy Investors

  • Daniel Loeb, a hedge fund manager fired off a letter and a 34-page presentation in 2017 to the board chairman and chief executive officer of Nestle, urging them to sell more of the businesses that do not fit and untangle its corporate structure. Loeb underlined that he is not happy with the company’s effort to buy back shares and that the sale of the U.S. confectionery business to a rival "has not gone far enough". Daniel Loeb also launched a website, www.Nestlenow.com, to push his case publicly.
  • Another investor who has 8 million shares in Nestle said that "his firm is sending a letter to Schneider and his team to throw their support behind Loeb".
Impact on the Company
  • Nestle's chief executive Ulf Mark Schneider hinted that the company was pressured from “activist investors” and said that it was committed to improving its cutting costs and growth.
  • Nestle took aggressive steps to reorganize its global operations driven by unhappy investors, cutting hundreds of jobs, and relocating its United States headquarters to lower-cost Arlington, VA, from California.
  • Nestle began a transformation with a statement made in early 2018 creating a “digital first” company accelerating its digital transformation.
Plans
  • Nestlé started changes in the products to meet the new consumers' demands: stripped carrageenan, a thickening agent that some consumers have soured on, out of some of its ice creams. It introduced a new way to shape sugar crystals so less sugar will be needed in some products without sacrificing taste. It has invested in Freshly, which is a subscription meal-kit company, hoping that they will find a new route into people’s pantries.
  • Nestlé started a digital transformation strategy creating social media presence for all its subsidiaries by forming close partnerships with Facebook and Google. According to Mr. Olmsted, “An even more defining use of social media within Nestlé has been the company’s development of an innovative internal company social media platform for its more than 200,000 employees,”
  • It started to ditch underperforming businesses after coming under fire from activist investor Daniel Loeb and his hedge fund Third Point back in July.
  • With pressure from Loeb, Schneider has changed 9% of Nestle’s portfolio so far. This is in line with his plan of trading its 10% by the end of 2020. He has sold off the U.S. confectionery business, the Gerber life assurance unit, while most recently is the dermatology arm. These are done for better-than-expected prices.

Research Strategy:

To determine the “biggest” challenges of Nestlé for the past 24 months, we started by looking at different news about the company. By doing this approach, we found a lawsuit affecting the company. This lawsuit started in 2017 and was reopened this year affecting the company in one of their largest brands. According to several articles, this lawsuit is affecting Nestle in several states of the U.S. and their public image as well and considered this one of the top 10 Nestle scandals.

Another big challenge surrounding Nestle was the unconformity of their investors since 2017, starting with Daniel Loeb expressing his concerns to chief executive officer and board chairman urging them to sell more of the businesses that do not fit and untangle its corporate structure. Since then, Nestlé has been making big efforts and changes to the company growth by cutting costs and making a huge transformation of the company by being "digital first".
Part
07
of seven
Part
07

Nestle Controversies

Three controversies that Nestle has been involved within the last 24 months are the Nestlé baby milk formula controversy, the Nestlé water bottling controversy, and the Nestlé child slavery lawsuits.

The Nestlé Baby Milk Formula Controversy

  • In February 2018, Nestlé came under fire for violating ethical marketing codes by providing customers with misleading information about the nutritional content of its baby formulas.
  • According to a report by the Changing Markets Foundation, Nestlé marketed its baby formulas by likening them to human breast milk even though that is prohibited by the World Health Organization.
  • In South Africa, Nestlé used sucrose in its infant formulas whilst marketing its Brazilian and Hong Kong formulas as free from sucrose. It also equated its vanilla-free baby milk powders in Hong Kong as being healthier.
  • While there was no clear-cut consumer reaction to this controversy, in previous years there have been boycotts, some of which were dropped. However, a group of organizations in the UK still maintain their Nestlé baby formula boycott which they launched in 1988.
  • While Nestlé did not respond to specific questions about the report, a Nestlé spokesperson elaborated their belief that breast milk is the source of nutrition for babies and that their products are meant to serve infants who, for whatever reason, don't have the luxury of being breastfed.

The Nestlé Water Bottling Controversy

  • In August this year, Nestlé found itself in yet another controversy regarding its plan to take 1.1 million gallons of water from the public property, Ginnie Springs, to sell as bottled water.
  • According to Nestlé, spring water is a renewable source that cannot run out.
  • Critics were opposed to the move saying such an investment was harmful to the environment as the river cannot sustain such a high level of water harvesting.
  • Opponents of the above move have launched an online petition and penned dozens of letters of opposition to Nestlé's move ahead of a court decision in early November that will determine whether they go on with their planned operations or not.
  • Critics were opposed to the move saying such an investment was harmful to the environment as the river cannot sustain such a high level of water harvesting.

The Nestlé Child Slavery Lawsuits

  • In the past, Nestlé has been embroiled in various court battles regarding the use of child labor by their cocoa suppliers.
  • In April this year, a proposed class action was filed by plaintiff Renee Walker in the California federal court claiming that child slaves in West Africa harvest cocoa for Nestlé's use, despite claims that its products are "sustainably sourced".
  • It is not clear whether the court dismissed the case, as has been the situation with other court cases. Nestlé is actively involved in quashing any lawsuits brought against it.
  • To counter claims of the use of child labor, Nestlé has a page on its website demonstrating its efforts to stop child slavery.
Sources
Sources

From Part 05
Quotes
  • "We wanted to move beyond conventional digital creative in order to catch the eye of the consumer and bring the new packaging to light," said Khurrum Zia, business executive officer for Nestlé Waters Pakistan. "AdSpruce gave us the option of creating a 3D image of the bottle that was mobile-optimized to display easily across all types of mobile phones and bandwidths. "
Quotes
  • "Compared to the traditional way of doing marketing campaigns, we leveraged social media to use an adaptive type of marketing based on great content. We were able to take a pulse on how consumers were reacting to this content and adapt it on the way."
From Part 07
Quotes
  • "The Swiss multinational Nestlé has been accused of violating ethical marketing codes and manipulating customers with misleading nutritional claims about its baby milk formulas."
Quotes
  • "In a controversial move that has outraged environmentalists and also raised questions with authorities responsible for the health and vitality of the river, the company is seeking permission to take more than 1.1m gallons a day from the natural springs to sell back to the public as bottled water."
Quotes
  • "Nestlé, the world’s largest food company, has broken a pledge to end the use of vanilla flavourings in baby milk powders, according to a report. The Swiss multinational has continued to sell vanilla-flavoured infant formulas in Hong Kong, even though it advertises infant products in mainland China as healthy options because they do not contain the flavouring, the report by the Changing Markets Foundation (CMF) found."
Quotes
  • "Nestle will respond in the coming days to a research report into its baby formula that accused the world’s largest packaged food company of putting profit before science."
Quotes
  • " A U.S. federal appeals court on Tuesday reinstated a lawsuit by a group of former child slaves accusing the U.S. unit of Nestle SA, the world’s largest food maker, and Cargill Co [CARG.UL] of perpetuating child slavery at Ivory Coast cocoa farms."
Quotes
  • "https://www.confectionerynews.com/Article/2018/02/13/Nestle-sued-again-over-child-labor-in-cocoa-supply-chain"
Quotes
  • "A proposed class action filed Friday in California federal court claims that child slaves on West African farms harvest cocoa for Nestle, even though it labels its products as "sustainably sourced.""
Quotes
  • "In 1988, a group of organisations in the United Kingdom launched a new boycott against us, which is on-going, despite the fact that we follow the WHO Code as implemented by national governments everywhere in the world."