Nestle in China
1. Article Review
Nowadays, due to environmental the consumers are concerning on quality of water and this issue brings more opportunity for bottle water producers. In China, the same situation happened and Nestle, the world’s No. 3 bottled water producer grew 27% its business in 2012.
Owning more than 60 water brands but Nestle have been losing its market share in Europe, the U.S and Australia, from 12% in 2006 decreased to 10% in 2011. However Nestle still relied on these developed markets and have been considering emerging markets for their future growth.
In China, Nestle’s sales increased from $1 billion in the year 2000 to $9 billion in 2012 and projected to be increased to $16 billion by 2017.
To increase the China’s market share to 1.7% in 2012 from 0.7% in 2009, Nestle ran television advertising programme to promote its Pure Life brand. Ranked as ninth-biggest water seller, Nestle considered China as a potential market for its bottled water business growth.
With the strategy of expanding business in China, since 1998 Nestle had 2 factories in Shanghai and Beijing that closed to water resources. They also acquired another factory of Yunnan Dashan Dinks in 2010 to increase capacity.
Nestle targeted to middle-of the-pack pricing to compete with other global brands and especially local brands. In order to attack to Chinese consumers’ mentality in term of quality and safety, Nestle believed that they can gain markets from local brands. Actually consumers have been switching to Nestle’s bottled water brands because with the same price, they get European technology and Nestle’s quality.
2. Discussion Questions
Why do the emerging markets still attract to the global company like Nestle regardless local producers’ success?
What is the strategy of sales and marketing help Nestle succeed in this market? Do you think it continue succeed with this strategy?
3. Lessons Learned
Capturing the changing in mindset of customer to lead
Nowadays, due to environmental the consumers are concerning on quality of water and this issue brings more opportunity for bottle water producers. In China, the same situation happened and Nestle, the world’s No. 3 bottled water producer grew 27% its business in 2012.
Owning more than 60 water brands but Nestle have been losing its market share in Europe, the U.S and Australia, from 12% in 2006 decreased to 10% in 2011. However Nestle still relied on these developed markets and have been considering emerging markets for their future growth.
In China, Nestle’s sales increased from $1 billion in the year 2000 to $9 billion in 2012 and projected to be increased to $16 billion by 2017.
To increase the China’s market share to 1.7% in 2012 from 0.7% in 2009, Nestle ran television advertising programme to promote its Pure Life brand. Ranked as ninth-biggest water seller, Nestle considered China as a potential market for its bottled water business growth.
With the strategy of expanding business in China, since 1998 Nestle had 2 factories in Shanghai and Beijing that closed to water resources. They also acquired another factory of Yunnan Dashan Dinks in 2010 to increase capacity.
Nestle targeted to middle-of the-pack pricing to compete with other global brands and especially local brands. In order to attack to Chinese consumers’ mentality in term of quality and safety, Nestle believed that they can gain markets from local brands. Actually consumers have been switching to Nestle’s bottled water brands because with the same price, they get European technology and Nestle’s quality.
2. Discussion Questions
Why do the emerging markets still attract to the global company like Nestle regardless local producers’ success?
What is the strategy of sales and marketing help Nestle succeed in this market? Do you think it continue succeed with this strategy?
3. Lessons Learned
Capturing the changing in mindset of customer to lead