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Nestle Case Analysis

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The biggest problem facing Nestlé is declining growth due to increasing competition in the food and beverage markets it serves. Competition from new, healthier food options, increasing pressure from generics, and smaller food companies have pressured margins and top line growth. Many of Nestlé’s brands are centered around processed food products which have been falling out of favor with consumers seeking healthier choices. Coffee, a business where Nestlé is a clear global leader, is experiencing tremendous competitive pressure, especially in the United States. These challenges have initiated growing pressure from investors for Nestlé to find ways to increase margins and growth. The below chart demonstrates the stagnant sales volume for Nestlé since 2010.

Opportunities for Nestlé to grow are increasingly coming from emerging markets. Over the past couple years, Nestlé has generated roughly 40% of revenue from developing countries and emerging markets. Revenue is also growing by approximately 13% in emerging markets compared to only 4.5% in areas that are developed. Analysts suggest as developing markets continue to grow, a middle class will form with more disposable income and ultimately consume more and higher quality food and beverages. Also, with emerging markets, by default they consume increasingly more food and beverage in contrast to existing developed markets which may experience economic troubles forcing consumers to become more
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