Nestle Philippines Essay

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Case Analysis on Nestle Philippines I. INTRODUCTION Background of the Case Nestle was the only foreign coffee producer in the Philippines owned by Nestle S.A. of Switzerland, the largest producer and marketer of food products in the world, and San Miguel Corporation, the largest beer brewer in the Philippines. For the past decades, the coffee consumption in the country has doubled causing its sales to increase. As Nestle’s market share increases it brought pressure to the company on how will they maintain high performance while facing the rapid change of the environment and competitors increase. Statement of the Problem Nestle is the major producer of coffee in the Philippines, and over the past decade its market share has…show more content…
In the Philippines Nestle all produced and sold products represented 75% of Nestle sales, such products as Magnolia ice creams and tetrapack juices, Berrtoni pastas and tomato sauce, Maggi seasonings, pasta, and mayonnaise, Smarties candies, and Carnation and Bear brand condensed milk. Instant Drink Division produced and sold Nescafe, Nestea, Milo, Coffee Mate and Milkmaid powered milk. Sales of Nescafe represented 53% of the department’s sale. Sales of Nestle (Philippines) gave it a rank of #10 among Nestle subsidiaries worldwide. In Asia-Pacific its rank was #3, after Japan and Australia. Research by Nestle had shown that in large cities, its market share was highest in small stores; among small stores, its market share was highest outside the big cities. These results were somewhat counterintuitive. Nescafe was viewed as a premium product. Nescafe had been the major producer of coffee in the Philippines. In 1996, Nescafe commanded 66% of the coffee market in the Philippines. There were several reasons for Nestle’s rapid increase in volume and market share. First, the price of green coffee beans on the world market and in the Philippines had fallen by fifty percent – and green coffee beans comprised about 30 per cent of total delivered costs. Nestle and other producers passed some of these cost savings on to consumers in lower prices. Nestle and its competitors had also introduced foil packages for coffee. Foil packaging was much

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