IntroductionNestl has been serving Pakistani consumers since 1988, when our parent company, the Switzerland-based Nestl SA, first acquired a share in Milkpak Ltd. Today we are fully integrated in Pakistani life, and are recognized as producers of safe, nutritious and tasty food, and leaders in developing and uplifting the communities in which we operate. We at Nestl Pakistan ensure that our products are made available to consumers wherever in the country they might be. Convenience is at the heart of the Nestl philosophy, and our aim is to bring products to people's doorsteps.

ProductsNestl has 6,000 brands, with a wide range of products across a number of markets including coffee (Nescafe), bottled water, other beverages (including Aero (chocolate) & Skinny Cow), chocolate, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food.

Mission-Vision StatementNestls mission statement is Good Food Good Life "Nestl is the largest food company in the world. But, more important to them is to be the world's leading food company. And Vision Statement is The Nestl global vision is to be the leading health, wellness, and Nutrition Company in the world. Nestl subscribes fully to this vision. In particular, it envision to: Lead a dynamic motivated and professional workforce proud of its heritage and bullish about the future. Meet the nutritional needs of consumers of all age groups from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality. Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country. Non-strategic activities and products are outsourced or discontinued.

Competitors of Nestle in PakistanThe biggest competitors In milk production are Olpers, Haleeb, and Good Milk. In food products

Bake Parlor

In liquid (water) Kinley Aqua-Fina

In juices Shezan Maza Fresher In powders there are no competitors.

SegmentationNestle has divided the whole Pakistan in to three zones: Northern Zone Central Zone Southern Zone

Major Products of Nestle distributed by RS&F MilkPak Nestle pure-life Cerelac Nescafe Nido Everyday

Distribution Plan of MultanThere are 24 distributors and many sub-distributors of Nestle working in Pakistan.

Two Biggest DistributorsCHAWALA Group (Karachi) PND Group (Multan)

CHAWALA groupChawla Group is the biggest distributor of Nestle in Pakistan. But our main purpose is to discuss the distribution plan of Multan. And PND Group is situated in Multan which is the second biggest distributor of Nestle in Pakistan.

PND GroupThis distributor is second biggest distributor of Nestle in Pakistan. Nestle company does not provide any incentive or discount in product to distributor but company provide discounts to customers. The owner of PND Group is Khawaja Salahu-d-din. He is not only the distributor of Nestle but also the distributor of Uni-Lever Ltd. Total target given by the company in the last year Dec-2010 to PND was 60Million. Now commission includes all expenses bear by the Distributor.Nestle Company does not provide any extra expenses.

PND MULTAN-OVERVIEW

Total Area Radius 225km Towns 68(Harappa to Sadiqabad) Total employees 200 Five Districts (Vehari, M.garh, DG Khan, Layyah, Khanewal) Total Shops 9832 Nestle Covered Shops 7880 NPL Shops (2009) 3380 NPL Shops (2010) 4110 Target Shops 2010 4300 Sub-Distributors 30 Combine Vans 26 Three Wheelers 23 NPL Exclusive Vans 01 NPL Exclusive Order Booker 01 Combine Sales Men 32

There are three department that are working in PND groupRS&F distributors handle food and beverages in Multan city.

PND (Pak National Distributor) handles all small towns and cities from Harappa to Sadiqabad.

Masood & Co. provides the services to all professional institutions like universities, banks and hospitals.

RS&F Distribution House(Priority products achievement for 3rd qtr 2010)

BrandNido Everyday Cerelac

3rdqtr (2009)28.5% 58.3% 21.8%

3rd qtr (2010)33.7% 80.6% 32.1%

Growth18% 38% 48%

Noodles Nescafe Yogurt

5.2% 2.5% 32.3%

6.9% 3.0% 43%

33% 25% 33%

RS&F Distribution House(Share in region)RS&F which is working in Multan it has 31% shares in overall region which is cover by

RS&F Distribution HierarchyIn RS&F distribution there is single distribution manager which control the whole distribution, under the distribution manager two supervisors is working who directly control the performance of rest of the employee working in the distribution which includes storekeeper, salesmen, order booker, supply men. Their hierarchy is given blow.

Distribution Manager Supervisor Supply Men Store Keepers Sales Men\Delivery Men Key accounts & large groceries (o.b) Key accounts & large groceries (s-m) Chilled dairy (s-m) Order Bookers (liquid) Order Bookers (powder) Whole Sale (o.b)

1 2 4 2 11 1 1 2 6 5 2

RS&F Distribution House (Powder and Liquid Share)In RS&F distribution there are 48% liquid and 52% powder products of nestle company .Which are distributed in Multan region .

RS&F Distribution HouseBrand wise Share

There are 7 products of Nestle which generate the 100% of group sale these include; MILK PAK EVERYDAY CERELAC NIDO JUICES YOGURT NESCAFE 35% 22% 15% 11% 11% 5% 1%

Distribution channelPath or 'pipeline' through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A distribution channel can be as short as being direct from the vendor to the consumer or may include several interconnected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer. Also called channel of distribution or marketing channel.

Distribution Channel of RS&FAccording to distribution manager of RS&F distribution they have distributed the Multan region into four categories. Which includes?

Key accounts o Large groceries Whole-Sellers Retailers

Key AccountsKey accounts are the permanent buyers of RS&F distribution. They have the highest sale turnover among all the categories. Targets are given to the key accounts per month. On achieving these targets different rewards are given to the key accounts. 13 shops are include in key accounts like food festivals, Shangri-La cuisine etc .

Large Groceries

Large groceries are the second largest sale provider to RS&F distribution. It includes 20 shops like NN Bakers, Mehboob Bakers, and Prince Departmental Store etc.

Whole-SellersThere are 90 whole seller which also generate a great part of sale of nestle products. Liquid related product whole sellers are 50 and Powder & Food related product whole sellers are 40

Retailers3118 shops are under the retailers and PND also does not provide products on credit to them.

RS&F are providing services Two Distribution Channel from January 2011 Medical Stores Potential Buyers 50 shops 150 shops

Types of DistributionThere are two types of distribution that PND does. Handling Distribution Distribution

Handling DistributionPND group provide products to sub-distributors that is called handling distribution.

DistributionIt is that distribution that provides products directly to customers.

Order booking methodsRS&F distribution in Multan fallow two types of order booking methods

Pre-order booking Spot selling

Pre-order bookingIn pre- order booking the order booker visit the market one day before the delivery and the very next day delivery is dispatch. On order booker usually cover 50 shops a day. And the next day a van make the delivery to those shops. One van covers the one order booker.

Spot SellingIn spot selling the salesmen take the products with them in the distribution van and provide the products to the shopkeeper with out any preorder mostly nestle pure life and yogurt are sold in this method.

Total Vans & Workers Working in Multan CityFor PowderTerritories Vans Delivery Men Order Booker 6 5 5 5

For LiquidTerritories Vans Delivery Men Order Booker 7 6 6 6

Factories in PakistanThere are two factories that are making products of Nestle. They are located in Sheikh-u-Pura (near Lahore) and the second one is in Kabir-Wala (near Multan). These factories provide products to PND Group.

Sale of PNDSale of PND group for last month was Rs.60million Avg. sale / month 2009 Avg. sale 2010 =280 tons =359 tons

Commission policies of NestleThe Nestle provided 5% commission to distributor and it is fix called fixed margin

Credit policies of NestlePND group provide credit to large grocery and key accounts with maximum amount of Rs.100, 000/= with a limit of 7 days.

Provide RefrigeratorThey Provide Refrigerator to customer whose sale are. Rs\= 60,000 per month for liquid.

Problems of distribution face by DistributorFollowing are the major problems face by nestle in their distribution.

Cost of working capital is increasing have not enough fund to spend on distribution through which cause a hurdle to expand the distribution ground.

Law and order problem is affecting very badly the distribution process like strikes etc

Infrastructure problems like bad roads, are also affecting the smooth distribution,

Economically instability.

Govt. policies are instable which also affect the distribution policies of nestle.

All expenses are bearded by distributor.

Solution to the problems The problem could be over come by increasing the working capital.

Nestle co. should provide some expenses to their distributors.

Law and order situation should be very strong.

Economic conditions should be stable.

Security guards should be provided for each van.

ConclusionAfter studying and discussing the distribution of Nestle. We come to the conclusion that distribution of PND group is very strong compare to their competitors. They are providing the products of nestle in each and every place which they have targeted. We can easily find Nestle from any shop. But we have also found some weakness related to distribution. No extra benefits are providing to the employees exclude salary thats why they are demotivated. And they do not provide any credit to retailers or whole sellers. If they provide credit their sale may be increases.