Nestle Pak

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Nestle Pakistan Limited– Case Study
Mission Statement of Nestle - Pakistan To positively enhance the quality of life of the people of Pakistan by all that we do through our people, our brands and products and our CSR activities. (End of Mission Statement)

Nestlé Pakistan Ltd is a subsidiary of Nestlé S.A. - a company of Swiss origin headquartered in Vevey, Switzerland. It is a food processing company, listed on the Karachi and Lahore stock exchanges and operating in Pakistan since 1988 started as a joint venture with Milk Pak Ltd. Nestle took over the management in 1992. For ten years in a row, the company has won a place among the top 25 companies of the Karachi Stock Exchange. Nestle Pakistan Limited has its head office in Lahore, the Company operates four production facilities. Two of it’s factories in Sheikhupura and Kabirwala are multi product factories. Factories in Islamabad and Karachi are only producing bottled water. The main products of multi product plants include processed milk, yogurt, juices, infant formula cereals and bottled water. The company has a vast sales and distribution network throughout the country to ensure that it’s products are made available to consumers throughout the country. Distribution is spread in 600 cities and small towns. Nestle Pakistan has distribution force of 6000 people and 1500 vehicles to meet the demand. Nestlé Pakistan brands are the main flag bearers of the company’s image. Nestlé Pakistan now operates the biggest milk collection operation in Pakistan, Currently; Nestlé Pakistan collects milk from an estimated 190,000 farmers spread over 146,000 sq Km’s in the province of Punjab and Sindh. “ Milk Pak” and “ Every Day” are the leading brands of Nestle in processed milk category “Nestlé Pure Life”, was initially launched for the first time by Nestle in Pakistan in 1998 after market research. This product was immediate success and made Nestle the most dominant and strong player in Pakistani bottled water market. It was decided by Nestle top management (SBU) that Nestle pure life brand developed in Pakistan should be introduced in other countries using the Pakistani successful experience to their advantage. Nestle pure life (bottled water brand) is now sold in 21 countries from North America, Asia and the Middle East to Africa and Latin America. Nestlé Pure Life is now number 1 brand in the world in bottled water brand category. Nestlé Pakistan today is the leading Food & Beverage Company in Pakistan with a key focus on Nutrition, Health and Wellness and reaching the remotest of locations throughout Pakistan to serve the consumers. Despite energy crises, very tense security situation, devastating floods and high inflation in the country, Nestle Pakistan achieved a strong growth of 25% in the previous year 2010 and net profit increased by 37%. Market is expecting even better results in 2011 as the indicators are all very positive About 60 per cent ingredients in beverages and cereals are acquired from local sources while dairy products are processed from 100 per cent locally available raw milk. There are 190,000 small farmers associated with Nestle Pakistan across the Punjab and Sindh, providing quality milk through an integrated network. The biggest challenge for the company is the increase in prices of commodities and how to absorb the price increases and not to pass the end consumers. Supply constraints and tough competition with Engro Foods has resulted in price increase for fresh milk by 25%. Nestle Pakistan believes in maintaining very high gross profit margins for all products but in the current year the increase in input cost of sugar, energy , fresh milk has resulted in 3% decline in gross margins. The Company continued to expand its development infrastructure aimed at accelerating procurement of good quality...
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