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Nestle Latin America Case Study

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Nestle is one of the world's largest global food companies. It has over 500 factories in over 70 countries, and sells its products in approximately 200 nations. Only 1% of sales and 3% of employees are located in its home country, Switzerland. Having reached the limits of growth and profitable penetration in most Western markets, Nestle turned its attention to emerging markets in Eastern Europe, Asia, and Latin America for growth. Many of these countries are relatively poor, but the economies are growing quickly. Thus a consumer base capable of buying many Nestle products will develop over the next couple of decades.
Nestle tries to enter emerging markets ahead of competitors, and build a substantial position in basic foodstuffs. As income …show more content…

Increas¬ingly, retailers found themselves in the unfamiliar posi¬tion of playing off against each other manufacturers of branded foods, thus bargaining down prices. Particularly in Europe, this trend was enhanced by the successful introduction of private-label brands by several of Europe's leading supermarket chains. The results included increased price competition in several key seg¬ments of the food and beverage market, such as cereals, coffee, and soft drinks.
At Nestle, one response has been to look toward emerging markets in Eastern Europe, Asia, and Latin America for growth possibilities. The logic is. simple and obvious-a combination of economic and population growth, when coupled with the widespread adoption of market-oriented economic policies by the governments of many developing nations, makes for attractive busi¬ness opportunities. Many of these countries are still rela¬tively poor, but their economies: are growing rapidly. For example, if current economic growth forecasts occur, by 2010 there will be 700 million people in China and India that have income levels approaching those of Spain in the mid-1990s. As income levels rise, it is increasingly likely that consumers in these nations wilt start to substi¬tute branded food products for basic foodstuffs, creating a large market opportunity

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