Nestlé
LC1
Company Case Analysis
Background
Nestlé Company had started off from a single man's idea,
and developed into a giant corporation. In 1866 Henri Nestlé,
a pharmacist, developed a milk food formula for infants who were
unable to tolerate their mother milk (Nestle.com). His product became
a success, and it created a demand throughout Europe. As Nestlé’s
popularity grew more businesses wanted to merge and become partners
with Henri Nestlé's business. From 1866 to 1947 the Nestlé
Company had gone through several name changes. In 1905, Anglo-Swiss
Condensed Milk Co. and Farine Lactee Henri Nestlé merged,
and the company’s name became Nestlé & Anglo-Swiss
Condensed Milk Co. Then in 1929, Peter-Cailler-Kohler Chocolats
Suisses S.A. merged with the company. The name was then changed
to Nestlé & Anglo-Swiss Holding Co. Ltd, on November
27, 1936. In December 1947, Co. acquired all the shares capital
of the Alimentana S.A. company in exchange for fifteen Nestlé
shares and fifteen Unilac shares for each of Alimentana S.A. share,
so this point the name was at Nestlé Alimentana S.A. And
then finally, the last name change that the company would endure
was in 1977, where it adopted the name Nestlé SA (Mergent
Online). Along the way Nestlé’s company remain successful,
which allowed them expand to new region and territories throughout
the world, making them the world’s biggest food and beverage
company. Nestlé’s headquarters are located in Vevey,
Switzerland, but the Nestlé Company has factories or operation
in almost ever country in the world. Since the Nestlé case
was published in 1998, it stated that Nestlé had employed
230,000 people worldwide, with $71.7 billion in sales (Rodgers,
2000). Now moving forward to 2003, Nestlé has increased the
amount of employees to 253,000 people, with $88 billion in sales
(Nestle.com). Nestlé is increasing the size of their company
year by year. In addition, to the increase in the size of the Nestlé
Company; Nestlé also has increased the variety in the different
products they offer. In Nestlé’s business strategy
they encourage product growth through innovation and renovation
(Nestle.com). This strategy has allowed Nestlé to develop
many different products in the various fields: baby foods, dairy
products, breakfast cereals, ice creams, chocolates and confectionery,
prepared foods, beverages, food services, bottled water, and pet
care. This brings us to the main focus of our case analysis, the
dairy division, and the yogurt product LC1 that lies within that
division.
Dairy Division / LC1
The dairy products at Nestlé are a big driving force for
the growth of the company’s sales. With the health kick of
the many individuals around the world, it pushes the innovator and
renovators of Nestlé to reach new height in finding better
and healthier products for their consumers. In 1998, the dairy business
had accounted for 5% of the company’s sales revenue (Rodgers,
2000). More recent, in the first half of 2004, Nestlé milk-based
products, nutrition, and ice cream accounted for 60% of Nestlé
revenue growth (Nutraingredients.com). The amount of 60% is a big
potion of the company’s earnings, so it would be best for
Nestlé to focus a big portion of their core competences and
resources on the fast growing dairy division. Which leads us into
the most recent yogurt produced by Nestlé’s, which
is the LC1.
Nestlé strives on being innovator and renovators. So their
research team in Switzerland discovered a culture called Lactobacillus
acidophilus, or La-1. This particular product was chosen because
it contains a probiotic agent, which is living microbial feeding
supplements that allow the lower intestine to function better (Rodgers,
2000). La-1 helps the small intestine function by improving the
body’s immune system, and in turn helping the body in preventing
diseases. Nestlé has now found a solution for their health
conscious consumers, but now they need to find away to implement
it into one of their products. That when the researchers at Nestlé
discovered that if they replace one of the mixes in their yogurt
with the La-1 the same texture would be maintained. Now with the
combination of Nestlé yogurt mix and the La-1; Nestlé
has given their yogurt the name of LC1.
1
> LC1 Background / Dairy Division
2
> Nestlé’s Competitive Strategies
3
> Competitor Profile – General Mills
4
> SWOT Analysis
5
> Proposed Strategic Plan
6
> Sources
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