Extensive SWOT Analysis of Nestle

About Nestle

Nestle SA is a global food and beverage firm based in Switzerland that operates in India as Nestle India. It arrived in India for the first time in 1956. Nestle has developed dramatically in India since then, from introducing its first milk product in the 1960s to delivering a wide selection of high-quality products in the Indian market. Among other things, it sells beverages, breakfast cereals, chocolates & confectionery, dairy, nutrition foods, vending, and food services. Nestle India’s portfolio includes well-known brands such as Maggi, Kit Kat, Polo, Milkmaid, and Nescafe.

Today, Nestle is one of the biggest food and beverage companies in the world. Nestle boasts a remarkable 96.5% market share in Infant Cereals, an impressive 62.5% market share in Pasta & 59.5% in Instant Noodles and the list goes on. These strong sales percentages have reflected themselves in the company’s financial statements. Nestle recorded around 1.92 billion dollars in revenue in 2020.

Now, let us look into the SWOT analysis of Nestle

SWOT ANALYSIS OF NESTLE

SWOT stands for strengths, weaknesses, opportunities, and threats. It is a tool commonly used to analyze things in a simplified manner. 

SWOT analysis is an excellent tool to determine the strengths of the company so that it can continue to work on those strengths, find out its weaknesses so that it can put extra efforts into those areas, its opportunities which shows where it can grow and its threats so that it can develop a plan and act proactively.

1. Strengths of Nestle

Strengths indicate what a business excels at and what sets it apart from the competition, such as a strong brand, a dedicated client base, a strong balance sheet, or distinctive technology.

• People, culture, values, and attitude

According to Harvard University, the main reason behind Nestle’s unparalleled success is its multi-cultural attitude. This multi-cultural attitude helps to add value to its product and value chain.

• Unmatched geographical presence

With a history of more than 160 years, this company offers a wide range of food and beverage options to its customers. Nestle operates in 190 countries worldwide and has around 500 factories, and has around 400,000 people working under them. 

• Unmatched research & development capability

Nestle invests 1.6bn $ every year in R&D and has the most advanced science and innovation network in the food industry. Nestle has a team of 4000 scientists and specialists leading them towards success through scientific research and fast innovation.

• Unmatched product & brand portfolio

Nestle has the largest range of food & beverage products in the world. The consumer of nestle products includes everyone from an infant to an old person. Nestle products have been successful at creating remarkable customer loyalty. 

• Decentralization

Nestle is a strong advocate of buying raw materials for its products from local areas. It not only helps the local farmers in the region but also boosts the economy resulting in the overall development of the place.

2. Weaknesses of Nestle

A company’s weaknesses keep it from realizing its greatest potential. A bad brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, or a lack of capital are examples of areas where the company has to improve to stay competitive.

• Has faced criticism over selling contaminated food, high water usage, and other unethical practices

Nestle has faced a lot of negative media coverage of late. Most recently they were heavily criticized for using lead in the production of Maggi. Some of the allegations that nestle faced are as follows :

• Unfair marketing of baby formula;
• Supports privatization of water;
• Demanding debt repayment from a famine struck country;
• Misleading labeling;
• Sourcing materials from suppliers practicing child and forced labor;
• Anti-unionism.

• Contaminated food recalls

Even after taking strict measures to ensure the best quality of food, Nestle has instances of contaminated food being sold. This does not help the company with its public image and has suffered some backlash from the public in the past.

3. Opportunities for Nestle

Opportunities are windows of opportunity or possibilities for something good to happen, but the company must seize them!

• Clear and accurate labeling indicating any harmful products

Almost 62% of consumers are more likely to choose products that are free of any harmful products. Today the consumers have become conscious of their health and nestle can use this opportunity by branding itself as the most healthy option in the market.

• Transparency in material sourcing

Consumers today make buying decisions on whether the product is sustainable and if the product has adverse effects on the environment. Being transparent in material sourcing can help nestle build a good brand image.

• Ready-to-drink (RTD) tea and RTD coffee markets 

Nestle does not have any RTD tea/coffee products. This sector is dominated by small companies. Nestle can use its resources to capture this untapped market. 

4. Threats to Nestle

Anything that potentially harms your firm from the outside, such as supply chain issues, market shifts, or a shortage of recruitment, is considered a threat. It’s critical to foresee threats and take action before becoming a victim and stagnating your growth.

• Cut-throat competition in the beverage and food industries

The increased competition in the food and beverage industry has posed a threat to Nestle. This industry is one of the most profitable as well as competitive industries.

• Changing climate conditions will affect the production of coffee

Due to the changing climate and global warming, the production of coffee has taken a toll and Nestle has to find a way out of this. In addition to those factors, cut-throat competition for prices has aggravated the problem even more.

With this, we come to the end of the SWOT Analysis of Nestle. Let’s conclude what we have learned.

Conclusion

Nestle has come a long way it has become one of the most recognizable brands in the world. Nestle has been successful in creating brand loyalty and building trust in the consumer’s minds. Nestle has continuously changed with the ever-changing choices and preferences of people all over the world. Nestle still has some obstacles to pass and has a lot of opportunities to grow. We are sure that Nestle will overcome these obstacles and maintain its position as one of the best companies in the world.

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