09 Nesvita Cereal Milk Drink.txt

7/23/2019 09 Nesvita Cereal Milk Drink.txt

http://slidepdf.com/reader/full/09-nesvita-cereal-milk-drinktxt 1/19

NESTLÉ NESVITA Cereal Milk Drink

By Ma. Cristina Villanueva

INTRODUCTION

In 1994, NESTLÉ launched the first of its kind instant cereal beverage under the brand NESVITAin the Philippines. This was the first product launched by NESTLÉ under the NESVITA brand name.NESTLÉ NESVITA Cereal Milk Drink truly was a revolutionary product back then since it was harpingtowards the benefits of convenience and healthy nutrition.

Since 1994 until the late 90s, NESTLÉ NESVITA Cereal Milk Drink was the only instant cerealbeverage in the market. The NESVITA brand name has been synonymous already withinstant cerealbeverage similar to that of Coca-Cola (or Coke) to soft drinks. However in recent years, othermanufacturers started to challenge NESVITA Cereal Milk Drink, low-priced brandstargeted to differentage groups as well as different Socio Economic Class (SEC) of the market.

One of the biggest threats of the product, PT Kakaos Energen, has been gaining alot ofmomentum in terms of market share due to its positioning as well as pricing. The product was initiallydistributed to sari-sari stores, market stalls as well as small groceries in Visayas and Mindanao but isnow slowly being introduced to the supermarkets, groceries, conveniences storesas well, channelswherein NESVITA Cereal Milk Drink is currently present1.

NESTLÉ recognized the emerging threat of Energen to its NESVITA business but alsorealized that

NESVITA may not be the right brand to challenge Energen due to its positioning and pricing strategy.This was the reason why in March 2008, NESTLÉ launched a low-priced cereal beverage under the megabrand BEAR BRAND called Busog Lusog Cereal Drink which is targeted to lower SECsas well as thewhole family.

The entry of BEAR BRAND Busog Lusog Cereal Drink proved to be a great strategy in challengingEnergen in the bottom of the pyramid consumers since it was distributed in channels where Energen is.The primarily role of the brand is to shift current Energen users to BEAR BRAND

Busog Lusog and attractnew users into the category. In the first 6 months of the launch of BEAR BRAND,it has been able to grabshare from Energen but it has also cannibalized a portion of NESVITA Cereal Milk Drinks market share.

Since NESVITA Cereal Milk Drink is the biggest contributor and profit driver for the total NESVITAbusiness, the challenge that the NESTLÉ Management posed to the NESVITA team is how it can grow the



business further without changing its positioning as a premium cereal beverage brand targeted mainlyto Filipino adults who are into a healthy lifestyle.

1 * Energen has the same distributor as Kopiko (which is an emerging player in the pure soluble coffee category)



THE COMPANY

NESTLÉ Worldwide

NESTLÉ was founded in 1866 by Henri NESTLÉ, a Swiss pharmacist who developed a foodforbabies who were unable to breastfeed. His first success was a premature infant who could not toleratehis mother's milk or any of the usual substitutes. NESTLÉ's new formula saved thechild's life. Peoplequickly recognized the value of this new product, and soon after, it was being sold in much of Europe.Today, NESTLÉ is the world's leading nutrition, health and wellness company. It is the biggest foodcompany in the world with sales of CHF 107.6 billion in 2007, and net profit ofCHF 10.6 billion. It hasfactories and operations in almost every country in the world.

NESTLÉ in the Philippines

Although NESTLÉ products were already available in the Philippines as far back as1895, it wasnot until 1911 that the NESTLÉ and Anglo Swiss Condensed Milk Company was establis

hed in thecountry, with its first sales office in Binondo, Manila. The Company was forcedto suspend its operationsduring World War II, but soon made a comeback after Liberation, under a new name: Filipro, Inc. In1960, NESTLÉ S.A. and San Miguel Corporation entered into a partnership resultingin the formation ofNutritional Products, Inc. (Nutripro). In 1962, Nutripros first factory started operations in Alabang,Muntinlupa to manufacture NESCAFE. Through the years, other manufacturing facilities wereestablished in Cabuyao, Cagayan de Oro, Lipa, Quezon City, and Marikina to meetthe growing demand

for NESTLÉ products in the country. In 1977, Filipro, Inc., the trading company, and Nutripro Inc., themanufacturing company, merged under the name Filipro, Inc. In 1986, Filipro, Inc. changed to itspresent name as NESTLÉ Philippines, Inc. In 1991, NESTLÉ pioneered food production and distribution inthe AIJV (ASEAN Industrial Joint Venture), a regional trade complementation program. The Companyparticipated in this program with the manufacture of breakfast cereals at the NESTLÉ Lipa Factory2, forexport to the ASEAN markets. In late 1998, NPI became a wholly owned subsidiaryof NESTLÉ S.A.,following the latters purchase and acquisition of San Miguel Corporations entire e

quity shareholding inthe company.

Today, NESTLÉ Philippines, Inc. (NPI) is a robust and stable organization, proud of its role inbringing the best food throughout the stages of the Filipino consumers lives. The company employsabout 3,400 men and women all over the country. It is now among the top companies in the entireNESTLÉ world. NESTLÉ produces and markets products under some of the countrys well kn



own brandssuch as NESCAFE, NIDO, MILO, NESTEA, MAGGI, COFFEE-MATE, BEAR BRAND, NESVITA, among others.Its product range has expanded to include coffee, milk, infant nutrition, infant food, beverages, nondairycreamer, food, ice cream and chilled dairy, breakfast cereals, confectionery and pet care. Overtime, NESTLÉs quality and affordable products have become strong brands, number 1 or number 2 intheir various categories, and a part of the Filipino way of life.

2 Today, the Lipa Factory is the NESTLÉ Groups ASEAN Supply Center for breakfast cereals.



The NESVITA Brand

Adult Nutrition is expected to grow dramatically in the coming years due to an increase inawareness of the benefits of healthy living and healthy eating. In fact, the increasing costs of health careand the key roles that governments play in promoting self-health maintenance further contribute tosupporting these trends. NESTLÉ has identified this opportunity for new consumer needs, as have othercompetitive food companies. However, NESTLÉs extensive experience in nutrition as well as its best-inclassR&D expertise provides it a significant advantage over competition. Beyond the businessopportunity, NESTLÉ sees this dairy and cereal-based Adult Health and Wellness Solutions as key pillarsin the strategic task of emerging as the trusted and most preferred Food and Beverage, Nutrition, Healthand Wellness company in the world. The importance of this initiative required aglobal and focusedapproach to seize this significant opportunity. Therefore, the starting point was to create a Mega brand.This is why NESVITA has been chosen as one of the leading international brand na

mes for dairy andcereal-based products which offer specific health benefits for adults.

NESVITA as a name can be interpreted as VITA for Life and Vitality in Latin, and in English forVital and Vitality, and can be easily associated with NESTLÉ. Hence, a good brandname potential to bebuilt as a strong NESTLÉ brand for a range of cross category products focusing onnutrition, health andwellness.

NESVITA was first launched in 1991 in Taiwan as an instant cereal beverage in single serve

sachets to enter the rapidly expanding cereal beverage market. Changing eating habits, as well as thetrend towards convenience and healthy nutrition, have driven the subsequent launches of NESVITAcereal beverage into China, Hong Kong, Thailand and Philippines in 1994.

In general, the good taste and good nutritional image of the NESVITA cereal beverage are thegenerally perceived values of the brand. It has been recognized that this basicbrand equity allowed forthe brand to be expanded firstly into different nutritional propositions, then more recently into differentproduct formats such as cereal bars, adult milk, and yogurt.

In the Philippines, NESVITA the brand was first introduced commercially via theNESVITA CerealMilk Drink product in 1994. At its launch it was seen mainly as a product for breakfast and an additionalfiber supplement. Around 2004 to 2006 the Carnation Powdered Milk brands were transitioned underthe NESVITA brand as NESVITA Pro-Bone Protection and NESVITA Pro-Weight Management. It was alsoaround this time where introduction of other specialized milks such as NESVITA P



ro-Heart and NESVITAPro-Digestion were launched. What used to be NESTLÉ 0% Yogurt Drinks and Cups were also adaptedinto the NESVITA Pro-Weight Management brand. NESVITA is now considered a MEGA BRAND inNESTLÉ Standards! (See Appendix 1 in page 12 for listing of all NESVITA products currently sold in thePhilippines)



THE MARKET

Healthy lifestyle trend among adults

Living in a fast-paced environment, people seldom have time to take care of themselves becauseof the numerous and sometimes monotonous tasks that has to be accomplished daily.These are justsome of the reasons why various diseases are very prevalent among adults such as heart disease,obesity, osteoporosis, tuberculosis, and the like. When a person reaches the age of 30 years old, abiological condition called somatopause occurs. This is simply a decline in overall body performancecharacterized by slower metabolism, lower recovery, decreased mobility, shorterendurance, reducedmental alertness and shorter memory.

People in general want to enjoy their life to the fullest. To enjoy life, one has to take care ofhis/her body. There is NO quick solution to living a healthy life. It takes a lot of effort and commitmentin order to live a healthy lifestyle. Nowadays, there is a growing trend on heal

thy living amongst adults.It can be in terms of eating the right food (high fiber, low calorie, no saturated fat, etc.) as well asengaging in physical activities (gym, running/jogging, sports, etc.).

Because of this emerging trend there are a lot of food brands, specifically beverages focusing onadult, health & wellness such as Del Monte, Lipton, NESVITA, Anlene, C2 , and many more. Eventraditionally unhealthy brands such as Coke (i.e. Coke Light and Coke Zero) and Pepsi (i.e. Pepsi Max)have added healthier alternatives to their regular portfolio. Below are some of the brands under each

of the beverages that promote health and wellness:

oSoftdrinks & Juices Coke Light, Coke Zero, Del Monte Fit & Right, C2 Lite, FAB,etc.oMilk & Yoghurt Non-fat Milk such as NESVITA Pro-Weight and Anlene, NESTLÉ Low FatFresh Milk, NESTLÉ YoghurtoTea Lipton Green Tea, Imported Green Tea variantsoCoffee Nescafe sugar free, Nescafe FIT (Teavigo)o

Cereal Beverages NESVITA Cereal Milk Drink, Energen, Quaker Q-Vital, BEAR BRANDBusog LusogTotal market for healthy beverages for adults, is approximately worth Php 44.5 billion.

Market Segment

NESVITA Cereal Milk Drink belongs to the Breakfast Cereals Category based on Nielsens definition. Thiscategory is further divided into three segments namely ready-to-eat cereals, all



-in-one cereals and hotcereals.(See Exhibit 1 for the Breakfast Cereal Category and its segments)



EXHIBIT 1: THE BREAKFAST CEREAL CATEGORY AND ITS

TOTAL BREAKFASTCEREALS CATEGORYReady-to-EatcerealsHOTcereals Primarily designed to beconsumed w/ milk Instant CerealBeverage Needs to be cooked(Quick Cooking) / InstantAll-in-onecerealsTHEBREAKFASTCEREALSCATEGORYThe Ready-to-Eat Cereals segment or popularly known as Breakfast Cereals are cereal basedready to eat products made of wheat, corn, rice, oats and are primarily designed to be consumed withcold milk (either powdered or ready to drink). The pioneer in this segment is the Kellogg Companywhich came out with the first ready to eat cornflakes back in 1906.

Sub-segments and Players:

Kids -NESTLÉ Koko Krunch, Kelloggs Frosties, Oishi Choco Flakes, etc.

Family NESTLÉ Corn Flakes, Kelloggs Corn Flakes, etc.

Adults NESTLÉ Fitnesse, Kelloggs Special K, Post Banana Nut Crunch

The Hot Cereals segment is primarily what we know as oats/oatmeal. The pioneer of thissegment is the Quaker Oats Company which came out with the first oatmeal product back in 1901.Primarily consumed for breakfast and is known to be good in lowering cholesterol (soluble fiber content

in oats).


Family Quaker Oats, Golden Oats, Australia Harvest, NESVITA Oatmeal

Unlike the ready-to-eat cereals, oatmeal is still generally known as an all-family product beingpassed down from generations to generations although recently there have been alot of innovations inthe category such as instant oatmeal (just add hot water) and flavored oatmeal (chocolate, banana, etc.)and fortified oatmeal (added vitamins & minerals)



The All-in-One Cereals segment is composed of instant cereal beverages that aremade ofcereals (i.e. wheat, corn, oats, etc.). Most of the brands like NESVITA Cereal Milk Drink can beconsumed either hot or cold. They are primarily consumed during breakfast as part of a meal or byitself (pantawid gutom). NESVITA Cereal Milk Drink was the pioneer in this segment when it waslaunched back in 1994. It was the only brand in the segment until the early 2000 when competition likeQuakers Q-Vital and Energen came into the picture.


Kids BEAR BRAND Busog Lusog, Nutrivim

Adults NESVITA Cereal Milk Drink, Quakers Q-Vital and Energen

Market Size

The Total Breakfast Cereals category is worth Php 2.1 Bio per year. In terms ofvalue (Php), theReady-to-Eat segment is the biggest contributor at 46% followed by Hot cereals a

t 39% and All-in-Onesegment at 15%. The category as a whole is growing but it is the Hot Cereals segment that continues togrow faster than the category at 18%. (See Exhibit 2 for the Market Size and Growth for each segmentof the category)

EXHIBIT 2: MARKET SIZE & GROWTH PER SEGMENT OF THE BREAKFAST CEREALS CATEGORY

Value VolumeSegment Value % Cont %Growth Volume % Cont % GrowthReady-to-Eat 973 M 46% 6% 2,500 mt 26% 4%All-in-One 308 M 15% 1% 871 mt 9% 4%

Hot Cereals 831 M 39% 18% 6,183 mt 65% 9%Total Category 2.1 B 100% 10% 9,555 mt 100% 7%

Based on: 2008 MAT TY May Nielsen RTA

In terms of volume, the Total Breakfast Cereals category is about 10,000 MetricTon categoryper year. The Hot cereals segment is the biggest contributor at 65% followed byReady-to-Eat segmentat 26% and All-in-One segment at 9%. The category as a whole is growing but it is the hot cerealssegment that continues to grow faster than the category at 9%.

Household Penetration by Segment

Based on AC Nielsens Retail Audit report as of May 2008 in a base of 14.5 mio households3, the HotCereal segment has a penetration of 22%, the Ready-to-Eat segment has a penetration of 18% and theAll-in-One segment has the lowest penetration at 11%. This shows that there is still a lot of opportunityfor penetration for the total breakfast cereals category and in each of its segments. The highest



opportunity for penetration can be found in the All-in-One segment.

3 average of 5 members per household



The All-in-One Market Segment & Its Key Players

The All-in-One Segment has 3 key players --NESVITA Cereal Milk Drink, Energen, and Quaker Q-Vital. A new entrant has been launched last May 2008 which is the BEAR BRAND Busog Lusog. NESVITACereal Milk Drink is the most expensive at around Php12.7, followed by Quaker Q-Vital at Php 11.4,while Energen is priced lower at Php 5.9 and BEAR BRAND Busog Lusog priced lowest at around Php 5.6.

Customer profile of each player can be seen below:

NESVITA CEREAL MILK DRINK .usage spans social status .Females .cuts across age .more working than non-workingQUAKER Q-VITAL

.slightly skews towards Class C .appeals to both genders .cuts across age and working statusENERGEN .middle class .predominantly females .31-40 years old

BEAR BRAND BUSOG LUSOG .lower class .Kids

NESVITA Cereal Milk Drink is not only the market leader in the segment, at 55% in terms ofvolume and 69% in terms of value but is the pioneer in this segment when it waslaunched back in 1994.The closest competitor is Energen which is about 29% of the market. Followed byQuaker Q-Vital at 8%and BEAR BRAND Busog Lusog at 3%. (See Exhibit 3 for Market Share of each player

)

EXHIBIT 3: MARKET SHARE OF PLAYERS IN THE ALL-IN-ONE SEGMENT

MARKET SHARE VALUE VOLUMENESVITA Cereal Milk Drink 69% 55%Energen 16% 29%Quaker Q-Vital 9% 8%BEAR BRAND Busog Lusog 3% 3%



are also snacking occasions for the brand since it is considered a healthier alternative to the usualmerienda fare such as pansit, chips, and the like. A serving of NESVITA Cereal Milk Drink is about 120calories, only 6% of RENI of a 2000 calorie per day requirement for an adult.

NESVITA Cereal Milk Drink comes in single serve sachets of 30g. Available in three variants:original (50% of the business), sweet corn (27%) and choco malt (23%).

Product Positioning

NESVITA Cereal Milk Drink is targeted to females aged 18-29 years old as the cereal beveragewhich makes you feel beautiful inside (healthy digestion brought about by the fiber content andcomplemented by the goodness of milk & vitamins) and out (a healthy digestion shows outside as well)

Product Key Selling Points

.Quality product made by NESTLÉ, the most trusted food company in the world

.Wholesome goodness in every serving: wheat, milk & vitamins for only Php 12.75.Available in three variants: original, sweet corn and choco malt

Product Packaging & Presentation

NESVITA Cereal Milk Drink is packed in single serve sachets. It can be bought per piece for trial or byboxes of 10s or by 5s. (See Apendix 2 in page 13 for Packaging of NESVITA Cereal Milk Drink)

.

NESVITA Cereal Milk Drink 30g single serve sachet.NESVITA Cereal Milk Drink: Box of 5s and 10sProduct Segmentation

NESVITA Cereal Milk Drink targets the ABC segment of the market as can be seen in thehousehold penetration of the product (See Exhibit 4 for Household Penetration of NESVITA Cereal MilkDrink). Its consumers are primarily females ages 18-29 years old, more working than non-working. Theseare active people who engage in some form of physical activity or exercise. They put a premium on

convenience but are not willing to sacrifice on either taste or nutrition.



EXHIBIT 4: HOUSEHOLD PENETRATION OF NESVITA CEREAL MILK DRINK

SEC.# of HH.HH.Penetration.NESVITA.% Contribution.AB.200,817.00.21%.3%.C.2,217,204.00.18%.31%.D.9,214,569.00.8%.62%.E.6,055,092.00.

3%.5%.

Product Usage

1..Open the sachet of NESVITA Cereal Milk Drink

2..Pour entire content to a mug or glass

3..

Add approximately 150ml of hot or cold water (depending on preference)

4..Stir and enjoy!

Distribution Availability and Visibility

NESVITA Cereal Milk Drink is available in all leading supermarkets, groceries, convenience storesand selected drugstores nationwide. It is not available in smaller trade channels such as market stalls &sari-sari stores because it is not the right channel for the product due to itspremium price.

In the supermarkets & groceries, NESVITA Cereal Milk Drink is placed in the breakfast cerealsaisle/gondola together with Ready-to-Eat cereals and Hot Cereals. Being the market leader in the All-In-One segment: NESVITA Cereal Milk Drink enjoys the biggest share of shelf space vs. its competitors(60% of shelf share).

In the convenience stores and drugstores, it is situated near other single-serve



categories/products (i.e. coffee, tea, juice, oatmeal, etc.). It leverages on the NESTLÉ distributionnetwork

o.Direct Key Accounts SM, Robinsons, Shopwise, Puregold, Mercury Drug

o.Via Distributors Regional Key Accounts, Groceries, Market Stalls & Sari-Sari Stores

Promotion

NESVITA Cereal Milk Drink is heavily promoted in TV, Print, PR, Website, Movie sponsorship,Sampling, Events, and more importantly in-store merchandising via Actmedia or traditional Point ofPurchase or Poinf of Sales materials. (See Appendix 3 in page 14 for current promotional materials ofNESVITA Cereal Milk Drink)



During its early years, NESVITA Cereal Milk Drink was targeted to kids (tagline NESVITAbreakfast you can drink) but eventually shifted to talking to adults since it was found out that adults arethe one who consume the product more than kids due to its healthy and convenientoffering (i.e. fiber).

Last year, NESVITA Cereal Milk Drink re-launched the brand by having the beautiful MarianRivera as their celebrity brand endorser, arguably, the hottest female celebrity in the Philippines rightnow. She was the perfect fit for NESVITA Cereal Milk Drinks latest campaign: Feel Beautiful Inside &Out.

*feel beautiful inside via NESVITA = fiber, milk & vitamins

*feel beautiful outside if you feel beautiful (good) inside, it shows outside as well

The ad featured Marian Rivera in her natural self (not as celebrity, not as Marimar, or any of heralter egos) and how she stays beautiful inside & out. One of the key points of t

he ad was that Marianonly says the word beautiful twice. Thus, truly highlighting how a person can feel beautiful by takingin a cup of NESVITA Cereal Milk Drink.

The campaign was also timed during the launch of her 2nd teleserye: Dyesebel tomaximize theaffinity with its chosen female celebrity. Thus, this campaign enabled the brand to generate a lot ofawareness, consideration and trial. This was the first time that NESVITA CerealMilk Drink used acelebrity endorser in its ad campaign.

Pricing

NESVITA Cereal Milk Drink is the most expensive brand in the segment. Its direct competitionare Quakers Q Vital and Oishis Day to Day cereal drinks in terms of pricing. Low priced competitionprimarily Energen is more than 50-55% cheaper vs. NESVITA

BRAND PRICE INDEXNESVITA 12.7 100%Q Vital 11.4 90%Oishi Day to Day 9 71%Nutrivim 6.6 52%

Energen 5.9 46%BEAR BRAND Busog Lusog 5.6 44%



It is my belief that to combat Energen, NESTLÉ decided to launch BEAR BRAND BusogLusogwhich is currently the cheapest cereal beverage in the market. Also unlike NESVITA, BEAR BRAND BusogLusog is available in the market stalls and sari-sari stores which can fight head on with Energen in termsof distribution.

Substitutes

There are a lot of healthy beverages that are more established in the market such as coffee, tea,juices, chocolate beverages, mineral water, etc. The cereal beverages or cerealdrinks category is still avery small segment but continues to grow. The main advantage still of this segment is that it is filling versus other healthy beverages or drinks.

THE CHALLENGE

NESVITA Cereal Milk Drink is the most established product in the current portfolio of the NESVITA brandhere in the Philippines. This product drives approximately 50% of the business o

f total NESVITA.A lot of players have started to challenge the product since its entry in 1994.In fact some of them,particularly Energen, has been gaining edge with NESVITA Cereal Milk Drink, viaits low-cost pricing andextensive distribution.

Since NESVITA Cereal Milk Drink is but just one of the numerous products under the brand nameNESVITA, it cannot reposition itself without misaligning itself with the rest of the product portfolio underthe NESVITA brand. This limits the products options in a way to fight head on wit

h the more aggressiveplayers of the market, at least in terms of price and positioning.

Given this situation how then can the brand grow further without changing its positioning as apremium cereal beverage brand targeting mainly adults who are into a healthy lifestyle?

09 Nesvita Cereal Milk Drink.txt

Documents

Transcript of 09 Nesvita Cereal Milk Drink.txt