Professional Documents
Culture Documents
September 2014
Scope
All values expressed in this report are in US dollar terms, using a fixed
exchange rate (2013).
2013 figures are based on part-year estimates.
All forecast data are expressed in constant terms; inflationary effects are
discounted. Conversely, all historical data are expressed in current terms;
inflationary effects are taken into account.
Microwaves
Refrigeration
Home
60,669
Appliances
Laundry
Large
Cooking
Home Laundry
Confectionary
144,010
121,107
Appliances
Appliances
132,745
121,107
US$185,477 mn
Hot Drinks
Microwaves
60,669
US$138.1 billion
Small
Appliances
Jewellery
1,724,022
Coffee
Tea
US$80.8 billion
US$40.2 billion
US$17.0 billion
Euromonitor International
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies opinions, reader
discretion is advised.
PASSPORT 2
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
STRATEGIC EVALUATION
Vevey, Switzerland
Regional involvement:
Global
Category involvement:
25,000
20,000
15,000
10,000
5,000
0
2008
2009
Euromonitor International
2010
2011
2012
2013
PASSPORT 4
STRATEGIC EVALUATION
Zone Europe
15,388 15,568
1.2%
Zone Americas
28,613 28,375
-0.8%
Zone Asia,
Oceania and Africa 18,875 18,859
(AOA)
-0.1%
Nestl Waters
7,174
7,231
0.8%
Nestl Nutrition
7,859
9,826
25.0%
Other
11,813 12,299
4.1%
Group Total
89,722 92,158
2.7%
Operating trading
profit
13,464 14,012
4.3%
10,677 11,060
3.6%
11.9
Euromonitor International
12.0
PASSPORT 5
STRATEGIC EVALUATION
H1 results in 2014
In the first half of 2014, Nestl delivered organic
growth of 4.7%, with total sales reaching CHF43
billion. In Q1, the extension of the Grand Cru
coffee range, innovative services and new
machines ensured that demand for Nespresso in
established markets remained solid despite
significantly increased competition. Geographic
expansion was accelerated with 14 new boutiques
opened across the world. In North America there
has been a good response to the launch of the
VertuoLine system delivering the long-cup coffees
preferred by US consumers.
Euromonitor International
Jan-June 2014
Business segment
(CHF million)
Jan-June 2014
% organic
growth
Powdered and
Liquid Beverages
9,835
5.3
Water
3,410
5.8
8,085
5.7
Nutrition &
Healthcare
5,659
7.6
Prepared Dishes
and Cooking Aids
6,394
0.0
Confectionery
4,184
3.4
PetCare
5,414
5.3
42,981
4.7
Total Group
PASSPORT 6
STRATEGIC EVALUATION
Efficiency - highest
quality - lowest cost
Consumer
communication
Product availability
across all
distribution channels
Nestl continuously
Nestl's cost-saving
Intense innovation in
One of Nestls
reformulates products
strategies have been
line with ongoing trends
strategic pillars is the
to enhance their
implemented as per the
and efficient
broadening of
nutritional profile, by
Nestl Continuous
communication of
distribution to increase
reducing unhealthy
Excellence programme.
added-value benefits
consumption
elements and/or
The group has
will be key to the
opportunities. Its
increasing their nutrient
improved operating
success of the groups
multiple channel
content. Central to the
margins over the years.
portfolio improvement
strategy, ranging from
groups innovation
In 2013, both the cost
and to enable strong
traditional retailers to
strategy is the
of goods and
pricing positions to
modern grocery and
development of
distribution expenses
recover significant R&D
online, especially
branded active
rose, but the
investment.
targets impulse
ingredients, through
companys trading
Investment in
opportunities, such as
which Nestl aims to
operating profit grew by
advertising will also be
street vendors, kiosks
highlight its science4% and its trading
key to increasing the
and vending machines,
driven approach and its
operating margin
groups competitive
which are vital to, for
R&D capabilities.
increased by 20 basis
edge and differentiating
example, ice cream
points on 2012.
itself from its rivals.
and confectionery
sales.
Euromonitor International
PASSPORT 7
STRATEGIC EVALUATION
SWOT: Nestl SA
STRENGTHS
Instant coffee
WEAKNESSES
Coffee pods
North America
Special.T
Euromonitor International
Threat to Nespresso
Nespresso-compatible
products and private
label are cannibalising
Nespressos share of
coffee pods.
The competition is
changing, with Keurigs
partnership with multiple
brands and the formation
of major rival JDE.
PASSPORT 8
STRATEGIC EVALUATION
Innovation
Premium tea
PASSPORT 9
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
COMPETITIVE POSITIONING
DEMBs overall performance was hampered to some extent by its limited geographic presence and slow
sales of Senseo, which has been one of the losers in the global single-serve coffee boom in recent years.
Going forward, DEMBs acquisition of Norways Kaffehuset Friele may help its development of single-origin
coffee beans in European markets. However, Keurigs expanded collaboration with established brands and
its potential interests in international markets are likely to see it emerge as an international player in the
medium term.
Global Hot Drinks: Selected Companies % Y-o-Y Growth 2012-2013
12
10
8
6
4
2
0
Nestl
Euromonitor International
Mondelez
Unilever
DEMB
PASSPORT 11
COMPETITIVE POSITIONING
Company
Nestl SA
% value
16.0
Mondelez International
Inc
6.9
Unilever Group
3.6
DE Master Blenders
1753 NV
Green Mountain Coffee
Roasters Inc
3.4
2.0
Tchibo GmbH
1.5
1.3
Associated British
Foods Plc
Tata Global Beverages
Ltd
Lavazza SpA, Luigi
Euromonitor International
1.3
1.2
1.1
PASSPORT 12
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
MARKET ASSESSMENT
% CAGR 2013-2018
Latin America
4
Asia Pacific
North America
Western Europe
2
Australasia
Eastern Europe
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Euromonitor International
PASSPORT 14
MARKET ASSESSMENT
10
8
6
Instant Coffee
Standard Fresh
Ground Coffee
0
-2
-5,000
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Euromonitor International
PASSPORT 15
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
COFFEE OPPORTUNITIES
2,000
1,500
1,000
500
0
-500
Brazil
Euromonitor International
US
Canada
China
UK
Fresh Coffee
Spain
Instant Coffee
Mexico
Russia
Ukraine
Germany
PASSPORT 17
COFFEE OPPORTUNITIES
Euromonitor International
1.5
PASSPORT 18
COFFEE OPPORTUNITIES
PASSPORT 19
COFFEE OPPORTUNITIES
Euromonitor International
PASSPORT 20
COFFEE OPPORTUNITIES
JDE
(15.3%)
Nestl (11.8%)
JM Smucker (4.1%),
Strauss/So Miguel (4.0%),
Tchibo (2.3%), Kraft (2.2%),
Melitta (1.9%), Lavazza (1.8%)
Others
Euromonitor International
PASSPORT 21
COFFEE OPPORTUNITIES
Euromonitor International
PASSPORT 22
COFFEE OPPORTUNITIES
Euromonitor International
2008
2012
2013
Keurig
Nespresso
Nescaf Dolce
Gusto
Tassimo
Senseo
L'Or Espresso
Cafissimo
Lavazza Systems
Jacobs
13
10
10
Delta
PASSPORT 23
COFFEE OPPORTUNITIES
45.0
40.0
35.0
1,000
30.0
800
25.0
20.0
600
% CAGR 2013-2018
1,200
15.0
400
10.0
200
5.0
0.0
US
Canada
Spain
Germany
Italy
France
Portugal Sweden
Euromonitor International
Brazil
Belgium
UK
Switzer- Australia
land
CAGR % 2013/18
PASSPORT 24
COFFEE OPPORTUNITIES
Beverage machines or
beverage
Collaborations
Euromonitor International
PASSPORT 25
COFFEE OPPORTUNITIES
Brazil: Coffee by
% Company Value Share
2013
Nestl Brasil has a strong position within instant coffee as its brand is
well known among consumers. Nestl has 14 exclusive stores and an
online portal to sell Nespresso coffee pods to consumers. At the
same time, its Nescaf Dolce Gusto brand has more widespread
distribution due to its more accessible price.
Nestls key current rival is DEMB, which is long established in Brazil
in both the off-trade and on-trade. DEMBs strength lies in fresh
ground coffee, where it has been leader for many years. Standard
fresh ground coffee dominates coffee sales in Brazil and will continue
to do so over the forecast period. However, the pods category is
advancing rapidly and has attracted growing interest from both
consumers and industry players. Nestl dominates the pods category
and Melitta has introduced pods; however, sales and distribution
remain limited. Strauss/So Miguel has not registered category
shares in pods yet. In view of the categorys anticipated rapid growth,
DEMB may build a solid platform for L'Or Espresso and Senseo to
grab share from Nespresso, as consumers are already aware of its
corporate offering and are familiar with its brands in fresh ground
coffee.
Euromonitor International
PASSPORT 26
COFFEE OPPORTUNITIES
Euromonitor International
JDE % value
JDE rank 2013
share 2013
16.2
1
24.6
26.5
18.2
PASSPORT 27
COFFEE OPPORTUNITIES
Euromonitor International
PASSPORT 28
COFFEE OPPORTUNITIES
PASSPORT 29
COFFEE OPPORTUNITIES
In this context, Green Mountain has been able to thrive. The company has been able to find success by
combining its pod technology with stable partnerships with several popular licensed regional coffee brands.
Green Mountain has agreements with 25 different coffee brands to produce K-Cups, including four of the
top five brands by value in the US fresh coffee market - Keurig itself, Folgers, Dunkin Donuts and
Starbucks.
This strategy has helped Green Mountain attract customers who would normally hesitate in purchasing a
pod coffee machine but are nonetheless interested in the possibility of brewing their favourite brand of
coffee at the touch of a button. Crucially, this partnership strategy has also limited the incentive for
competitors to launch rival pod systems and is in turn attracting further cooperation agreements. Even
Lavazza, the Italian coffee brewer, which in Europe partners Electrolux for its pod system, has decided to
cut out the Swedish company from its US pod expansion and has partnered with Green Mountain instead.
Lavazza purchased a 7% stake in Green Mountain and in 2012 launched its Keurig Rivo.
The Coca-Cola Co has purchased 10% stake in Keurig and started investing in the cold beverage system.
TCCCs investment strengthened Keurigs confidence to expand and ensures that Keurigs innovation
pipeline will not run short.
Currently, Keurigs sales are mainly in North America. As the company grows, its international ambition
may become more apparent. By then, Keurig will become Nestls global rival.
Euromonitor International
PASSPORT 30
COFFEE OPPORTUNITIES
Exploration in foodservice
150
125
100
75
50
25
0
2008-09
Keurig
2009-10
2010-11
Nestl
2011-12
2012-13
PASSPORT 31
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
600
7.0
500
6.0
5.0
400
4.0
300
3.0
200
2.0
100
CAGR % 2013-2018
Other hot drinks includes chocolate powder, malt drinks and local products. China represents a strong
growth market, but Nestl has limited presence there. Chinas market is highly fragmented, with VV Group,
the market leader, commanding around 7% of retail value sales in 2013. Nestls strategy for China
changed upon its acquisition of Yinlu, which gave it a presence in local beverages and it does not try to
convince Chinese consumers to try Western style drinks. In Brazil, Nestl leads other hot drinks with strong
brand Nescau and Nesquik. Both PepsiCo and TCCC is present but other hot drinks are not their core
beverages in Brazil. Thus, Nestl has a good opportunity to sustain its leadership given its investments in
marketing campaigns and research and development of new products, pack sizes and flavours..
Other Hot Drinks Prospects by Country 2013-2018
1.0
0.0
China
Brazil
Indonesia
Nigeria
India
Argentina
Euromonitor International
Russia
Mexico
Venezuela
CAGR % 2013/18
PASSPORT 33
In Brazil, Nestl (Nescau) and PepsiCo (Toddy) are the key players. The fact that the combined share of
Nescau and Toddy is nearly 70% of the market makes it a real barrier for other potential entrants. Nescau
is a fortified chocolate-based flavoured powder drink with Actigen-E, a combination of vitamins and
minerals, in its formula. A marketing campaign focusing on adolescents is its key strategy to boost sales in
this category.
1,000
4.0
800
3.0
600
2.0
400
1.0
200
0
0.0
Chocolate-based Flavoured
Powder Drinks
Non-Chocolate-based Flavoured
Powder Drinks
Euromonitor International
CAGR % 2013-2018
Absolute growth
(US$ million)
In Mexico, chocolate-based flavoured powder drinks registered the strongest growth in 2013, driven mainly
by advertising which helps develop the perception among consumers that these are high quality products,
and in turn limits the impact of price increases on consumers purchasing decisions. Nestl Mxico
registered the strongest growth in other hot drinks in retail value share terms in 2013 due to the improved
performance of Nesquik in chocolate-based flavoured powder drinks. This was due to the recent launch of
the product containing stevia, an all-natural sweetener, which is considered healthier and potentially helpful
in curbing childhood obesity.
World: Other Hot Drinks Prospects by Category 2013-2018
CAGR % 2013/18
PASSPORT 34
3.0
10.0
2.5
8.0
2.0
6.0
1.5
4.0
1.0
2.0
0.5
0.0
% CAGR 2013-2018
0.0
China
India
Pakistan
Indonesia
Russia
Euromonitor International
Brazil
Germany
US
% CAGR 2013/18
PASSPORT 35
Company
Unilever Group
11.9
3.3
3.0
2.3
2.3
1.7
1.6
1.5
Ito En Ltd
1.5
1.4
PASSPORT 36
Euromonitor International
PASSPORT 37
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
BRAND STRATEGY
14,000
35.0
12,000
30.0
10,000
25.0
8,000
20.0
6,000
15.0
4,000
10.0
2,000
5.0
0.0
Nescaf
Nespresso
US$ million rsp
Euromonitor International
% CAGR 2008-2013
Nestl Major Hot Drinks Brands Value Sales 2013 and % CAGR 2008-2013
16,000
CAGR % 2008/13
PASSPORT 39
BRAND STRATEGY
15,000
15.0
10,000
10.0
5,000
5.0
% y-o-y growth
2012-2013
Japan, China and Russia are Nescafs major markets. While Japans market is mature and Nescaf saw
continuous slow growth, China was the growth driver, increasing by 15% in 2012-2013. There are still many
years of strong growth in instant coffee in China as coffee culture spreads further. The company has also
been acting as a coffee ambassador in traditional tea-drinking markets in Asia Pacific. Nestl is among
the most adept at tailoring its products to meet local requirements.
Global Major Instant Coffee Brands Value Sales 2013 and % Y-o-Y Growth 2012-2013
0.0
Nescaf
Jacobs
Maxwell House
US$ million rsp 2013
Euromonitor International
Maxim
Carte Noire
Tchibo
Moccona
PASSPORT 40
BRAND STRATEGY
2,500
30.0
2,000
25.0
1,500
20.0
15.0
1,000
10.0
500
3,000
5.0
0.0
Keurig
Nespresso
Tassimo
US$ million rsp 2013
Euromonitor International
Senseo
L'Or Espresso
PASSPORT 41
BRAND STRATEGY
Euromonitor International
PASSPORT 42
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
OPERATIONS
Euromonitor International
PASSPORT 44
OPERATIONS
In May 2012, Nestl announced a CHF300 million investment in a third factory for Nespresso capsule
production, in Fribourg, Switzerland. This follows a CHF300 million investment in Nespressos second
production and distribution centre in Avenches, Switzerland in 2009.
In 2012, Nestl also announced a 220 million investment in a new Nescaf Dolce Gusto factory in
Germany. The factory aims to produce about two billion coffee capsules a year for the German market, as
well as for export to Eastern Europe and Scandinavia.
Nestl also continues to invest in its Nescaf instant coffee, including a project in Russia designed to meet
domestic demand, as well as for export to other CIS countries.
In 2013, Nescaf opened a new coffee centre of excellence in the Philippines to improve the quality and
quantity of the coffee crop in a country where demand for beans far outstrips supply. The facility, in
Batangas City in the central Philippines, was set up as a one-stop shop for coffee-growers in the region to
give farmers access to the best of Nestls coffee farming technology and training.
Euromonitor International
PASSPORT 45
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
COFFEE OPPORTUNITIES
OPERATIONS
RECOMMENDATIONS
RECOMMENDATIONS
Euromonitor International
PASSPORT 47
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PASSPORT 49