Since its incursion into the nation’s business space about 57 years ago, Nestle Nigeria Plc, one of Africa’s biggest food and beverage companies, has been unequivocal about its mission: to create shared value and delight the Nigerian consumers with high quality nutritious food products.
For the company, Creating Shared Value (CSV), simply stemmed from the belief that for a company to enhance its fortunes, over the long term and create value for shareholders, it must create value for society at the same time.
“Each and every commitment is based on our convictions, not convenience. Respect, for people, different cultures, the environoment and for the future of the world we live in is the foundation of Creating Shared Value,” the company says.
Not a few would, therefore, readily attribute its ability to soldier on and weather the storm in the nation’s tempestuous business space to its commitment to that mission, and its readiness to ‘walk such talk’.
More than five decades after, this behemoth in the nation’s fast moving consumer goods (FCMG) sector has remained committed to the course, unwavered.
Founded in 1961, when the nation was just settling down as a republic, after she had successfully seen the back of her colonial masters in 1960, the custodians of the brand, no doubt had their strategy; to tap the vast, yet-to-be- explored business opportunities, especially the abundant human and natural resources in the brand new republic , then.
A humble beginning
The history of what has now become a force to be reckoned with in the FCMG industry around the globe, will, without doubt, serve as an inspiration and eye-opener for many individuals, especially prospective investors, desirous of starting a business concern. It is an attestation to the fact that a business does not need to start big, to be great.
For instance, in 1867, when the German-born pharmacist, Henri Nestle, mooted the idea of a milk-food production company in the small town of Vevey, in Switzerland, little did he know that he was giving birth to a business concern that would bestride the FCMG industry like a colossus. His desire, then, was to provide a milk-food, an infant cereal for nursing mothers, unable to breast- feed. The cereal, which contained ingredients, such as milk, wheat flour and sugar, became an instant success; since it was speaking to the needs of some women at that time.
Interestingly, from an organization conceived on the success of infant formula, Nestle, which later merged with a competing dairy company, founded by three American brothers, has grown to become a global leader in nutrition , health and wellness, a parent body of Nestle Nigeria Plc. Interestingly, that simple step has, today, improved millions of lives around the globe.
Brands
A major strength of the company is its array of products, designed to meet basic needs of the Nigerian consumers. Interestingly, some of products have been in the face of Nigerians, serving the purposes for which they are designed effectively, for so long, that they now have a life of their own.
For instance, some of such products include: Maggi, Cerelac, Nutrend, Nan, Lactogen andGolden Morn, Milo, Chocomilo, Nido, Nescafe and Nestle Pure Life.
For the average seasoning consumer, Maggi Seasoning still remains a generic name for all seasoning offerings in the market segment, while Cerelac also serves the same purpose in the infant food category. This, for many, without doubt, confirms the success of the brand-building efforts of their custodians in the past few decades, in the country.
Financials
Despite the country’s topsy-turvy business terrain, its financials still depict a conglomerate that has been able to keep its head above water, with a 6.6 per cent revenue growth, in 2019, over the previous year.
While posting a revenue of N283.9billion, the company also declared a Gross Profit of N127.6billion, in the year under review, as against N113.9billion of 2018. It also posted N45.6billion as Profit After Tax for the year as against N43.0 billion, recorded in the previous year.
The decision of Nestle S.A. Switzerland, its parent company and the majority shareholder of the company, to increase its stake in the Nigerian subsidiary is also seen as a move that would further bolster the financials of the Nigerian conglomerate.
Nestle S.A had, in August this year, notified the Nigerian Stock Exchange of its intention to increase its stakes in the subsidiary as it purchased about 229, 697 additional units of Nestle Nigeria shares at an average price of N1,249.65 per unit, putting the total sum of the transaction at N287million.
Such insider transaction is seen as representing the degree of shareholders’ perception of the company’s valuation and a possible capital raise.
Besides, the purchase of the shares will reduce the volatility of the company share price since the parent company has consistently mopped up stray volumes on the exchange.
Strategy
According to the company, one of the strategies it has adopted to enhance its performance has been product innovation and improved distribution channels.
An example is its enhancement of its portfolio with new products, especially its Maggi Signature seasoning mixes, which it adapted to consumer tastes and cuisine across the country.
Its launch of the Cerelac Junior, fortified with iron, to meet the nutrition needs of pre-school children remains one of the steps it had taken to enhance its bottomline in 2019.
The then company’s Managing Director and Chief Executive Officer, Mauricio Alarcon confirmed this much while reacting to the company’s enhanced bottom-lines early this year.
According to him, the strategy had allowed the company respond speedily to consumer preferences.
“We achieved this by responding speedily to consumer preferences, by offering product innovation and improving our distribution channels.
“Our high-performing team adapted quickly to changing consumer expectations by adopting new ways of delighting our consumers in the market place,” Alarcon had stated, then.
Giving back
The management of the company insists that the long- term success of its business is dependent on nurturing thriving communities closest to its operations, in tune with its commitment to improving livelihoods of its individuals in such operating environments.
For instance, its Healthier Kids (N4HK) initiative, aimed at teaching and promoting healthy nutrition, healthy hydration, hygiene and and active lifestyle, is designed to reach over 17,000 children and 350 teachers in 30 primary schools.
“It would be difficult for children to imbibe healthy nutrition and hygiene practices if the environment is not conducive for putting what they learn into practice. It is therefore important to ensure that the children and teachers have access to good classrooms, safe clean water, toilets and hand -washing facilities,” said the company’s Corporate Communications and Public Affairs Manager, Victoria Uwadoka, at the presentation of one of those facilities, last year.
Besides, in 2016 alone, a total sum of N8.78billion was expended on Corporate Social Responsibility (CSR) initiatives.
While the breakdown of the amount revealed that the sum of N5.88billion was spent on the construction of a water fountain for the Abaji community, in the northern part of the country, about N2billion of the amount was committed to buying products for internally displaced persons, in various camps across the federation.
Others include the donation of a water tank to the Nigerian Police Special Fraud Unit at the cost of N500million and donation of N400million to the Institute of Chartered Secretaries and Administrators of Nigeria, same year.
Clear and present challenges?
While the ‘innovation’ claim, on the part of the company’s management in improving its fortunes may sound soothing and more re-assuring for consumers and patrons of the numerous brands in the company’s portfolio, not a few however believe that the company would have to brace up for the challenges the next few years are likely to throw at it.
For instance, unlike in the past, when it enjoyed a relative monopoly and dominance in whatever segment of the markets its brands found themselves, the scenario is fast changing today.
More products are springing up in the foods and beverages market to give the established brands a run for their money. Interestingly, the continued innovation of its Maggi Seasoning, its flagship brand, had experienced in the past few years may not be unconnected with the acknowledgement of that fact that the terrain is changing, and a brand has to innovate or be consigned to the dustbin of history.
Besides, it has become imperative for the company to enhance its marketing activities around its offerings, so as to promote, as well as douse misconceptions about some of those brands. For instance, many believe that the company is not doing enough in allaying the fears of its teeming consumers, regarding some of its frontline brands.
“Misconception or false claims about a brand is not uncommon, but how such brand deals with it is what will determine whether its degree of patronage would change at the end of the day,” argued a marketing practitioner.
The above can not but be succinct. The advent of the new media and the increasing sophistication of today’s consumers make it imperative for brand custodians to be on top of their communication game. And while it is obvious that Nestle Nigeria Plc is unrelenting in this area, it however has to do more, if it hopes to starve off competition and continue with its decades-long tradition of creating shared value.
Fortunately, many believe the appointment of a new helmsman in the person of Wassim Elhussein will, without doubt, bring the much-needed freshness to the operations of this conglomerate.
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