Nestlé: an In-Depth Marketing Analysis

The Swiss company Nestlé S.A. is one the largest fast-growing consumer goods companies in the current market. However, the company experienced a 33% decrease in net profit in 2015 and a 7.7% decrease in sales from 2014-2015.

Nestlé wants to know which product categories might contribute to the decrease in profit and sales, and which categories should it invest in and focus more on in the upcoming five years.

My team and I conducted product positioning to understand how each product category might grow in the future, and a sales forecast by product categories based on sales data from 2012-2021.

As of 2015, Powdered and Liquid Beverages account for the biggest portion of Nestlé's sales. Nutrition and Health Science, as well as Milk Products and Ice Cream, are the runners-up.

Product Positioning (GE McKinsey Matrix)

Based on our observations of the markets and the product category sales data, we came up with the weights for each measurements for the GE McKinsey Matrix as the following (scale from 1-5, higher number indicates greater importance):

After coming up the 8 measurement inputs for each product categories, we have the GE McKinsey Matrix result:

Based on the Matrix, Powdered and Liquid Beverages stays as the most revenue-generating category because of its number of sub-brands, availability and reach worldwide. There's potential growth of competitiveness for PetCare, Prepared Dishes and Cooking Aids, as well as Nutrition and Health Science as modern lifestyle shifts to be more health conscious, for both human and pets.

Water has a slight growth in busienss strength, possibly stem from the reputation for Nestlé's sparkling water brands. Lastly, for Milk products and Ice Cream and Confectionery, the busienss strength decreases potentially due to public's decreasing intake of dairy products and added sugars despite the high numbers of sub-brands Nestlé has.

Sales Forecasting with Excel

We also performed sales forecast across product caregories to understand how each category might grow or decline in the upcoming five years in revenue:

The dashed gray line indicates the current year (2021).

The product categories that were forecasted to grow are: PetCare, Powdered and Liquid Beverages, Nutrition and Health Sciences.

On the other hand, the categories that might experience sales decline in the upcoming 5 years are: Milk Products and Ice Cream, Prepared Dishes and Cooking Aids, Confectionery, Water.

Conclusions & Recommendations

Based on the result of the GE Mckinsey Matrix and the Excel Sales Forecast, we have the following recommendations for Nestlé regarding the product categories to invest in:

Petcare is the ideal segment to foster revenue generation and growth; It’s net profit margin will grow in the near future and overall, there is potential to continue growing in the next 10 years. Therefore, an injection of investments in this product could boost Nestle sales overall.

Water and Confectionery have shown the most decline across 10 years. To counter this, having advertisements and campaigns to boost brand recognition will help Nestlé to gain at least a stable market share instead of a decline.

Given the global shift in consumer preferences to bemore cruelty-free, vegan and more sustainable, Nestlé should be aggressively pursuing more products that cater to this behavior. There are an increasing number of people opting in for a sustainable lifestyle, which was heavily reflected in the food products they choose to purchase. It's beneficial for Nestlé to focus on these issues to maintian its current status in the consumer goods industry.