Summer Project ReportOn

Potential of Nestle Dahi in

Ludhiana

Prepared By:

Vikesh Bansal

Acknowledgement

I avail this opportunity to acknowledge my deep sense of gratitude and indebtedness to Mr. Sabir Mohammed (Area Sales Manager, Nestle India), under whose able guidance, I have completed this project. I would also like to thank Mr. Gurpreet Singh (Senior Sales Officer) and Mr. Raman Gosain (Sales Officer) who rendered me their invaluable help, suggestions and encouragement with monumental patience and constant guidance. I would also like to thank the salesmen of Nestle India in Ludhaina for their kindness and valuable guidance and assistance, which helped me in the completion of my summer training.

I would also like to thank my project guide Prof. J.J Maini, whose valuable suggestions, throughout the training session, helped me a lot to understand the real meaning of such internship.

Introduction:

India is said to be the country of diversity in which people of different religion,

cultures, traditions, cast and creed are living. Since people have different religion,

cultures and traditions, their eating habits are also different from each other. In Northern

India, wheat is considered to be main food ingredient whereas rice is considered to be

main food ingredient in south India.

In spite of the diversities found in eating habits of Indian people, there are certain

items which are equally consumed as part of the food in every part of the country in one

form or the other. Dahi or Curd can be considered as such type of item. It is not only a

nutritious item but tasty also.

Introduction about project:

As it has already been mentioned that Dahi is consumed all over the country,

hence there is huge demand of Dahi. Generally the demand for Dahi is being met by

unorganized sector. This sector includes the curd supplied by Halwaii or by household

sector. In order to meet the demand and to tap the business opportunity, many private

sector players have entered in this market In Punjab, the major player in this market are

“Verka” and “Nestle”.

Hence this project has been undertaken to explore the potential of Nestle Dahi in

Ludhiana city.

Research Methodology:

The data has been collected from the distributors and dealers of Nestle. For that,

sample survey has been conducted using the questionnaire and personal interview

techniques. The sample size is 3 distributors and 500 dealers based at Ludhiana.

Limitations of the project:

The survey has been conducted by gathering the data from Nestle dealers based in

Ludhiana. The reasons may be different for different places based on the cultures of that

particular place.

Introduction about Nestle:

Nestle was founded in 1867 on the shores of Lake Geneva in Vevey, Switzerland and its

first product was “Farine Lactée Nestlé”, an infant cereal specially formulated by Henri

Nestlé to provide and improve infant nutrition. From its first historic merger with the

Anglo-Swiss Condensed Milk Company in 1905, Nestlé has grown to become the

world’s largest and most diversified food Company, and is about twice the size of its

nearest competitor in the food and beverages sector.

Nestlé’s trademark of birds in a nest, derived from Henri Nestlé’s personal coat of arms,

evokes the values upon which he founded his Company, Namely, the values of security,

maternity and affection, nature and nourishment, family and tradition. Today, it is not

only the central element of Nestlé’s corporate identity but serves to define the Company’s

products, responsibilities, business practices, ethics and goals.

In 2004, Nestlé had around 247,000 employees worldwide, operated 500 factories in

approx. 100 countries and offered over 8,000 products to millions of consumers

universally. The Company’s transparent business practices, pioneering environment

policy and respect for the fundamental values of different cultures have earned it an

enviable place in the countries it operates in. Nestlé’s activities contribute to and nurture

the sustainable economic development of people, communities and nations. Above all,

Nestlé is dedicated to bringing the joy of ‘Good Food, Good Life’ to people throughout

their lives, throughout the world.

Introduction about Nestle (India):

Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. With seven factories and a

large number of co-packers, Nestlé India is a vibrant Company that provides consumers

in India with products of global standards and is committed to long-term sustainable

growth and shareholder satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business and

expects the same in its relationships. This has earned it the trust and respect of every

strata of society that it comes in contact with and is acknowledged amongst India's 'Most

Respected Companies' and amongst the 'Top Wealth Creators of India'.

Nestlé’s relationship with India dates back to 1912, when it began trading as The Nestlé

Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished

products in the Indian market.

After India’s independence in 1947, the economic policies of the Indian Government

emphazised the need for local production. Nestlé responded to India’s aspirations by

forming a company in India and set up its first factory in 1961 at Moga, Punjab, where

the Government wanted Nestlé to develop the milk economy. Progress in Moga required

the introduction of Nestlé’s Agricultural Services to educate, advise and help the farmer

in a variety of aspects. From increasing the milk yield of their cows through improved

dairy farming methods, to irrigation, scientific crop management practices and helping

with the procurement of bank loans. Nestlé set up milk collection centres that would not

only ensure prompt collection and pay fair prices, but also instil amongst the community,

a confidence in the dairy business. Progress involved the creation of prosperity on an on-

going and sustainable basis that has resulted in not just the transformation of Moga into a

prosperous and vibrant milk district today, but a thriving hub of industrial activity, as

well.

Beginning with its first investment in Moga in 1961, Nestlé’s regular and substantial

investments established that it was here to stay. In 1967, Nestlé set up its next factory at

Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea.

The Nanjangud factory (Karnataka), became operational in 1989, the Samalkha factory

(Haryana), in 1993 and in 1995 and 1997, Nestlé commissioned two factories in Goa at

Ponda and Bicholim respectively. Nestlé India has commissioned in 2006 its 7th factory

at Pant Nagar in Uttarakhand.

Nestlé has been a partner in India's growth for over nine decades now and has built a very

special relationship of trust and commitment with the people of India. The Company's

activities in India have facilitated direct and indirect employment and provides livelihood

to about one million people including farmers, suppliers of packaging materials, services

and other goods.

The Company continuously focuses its efforts to better understand the changing lifestyles

of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and

Wellness through its product offerings. The culture of innovation and renovation within

the Company and access to the Nestlé Group's proprietary technology/Brands expertise

and the extensive centralized Research and Development facilities gives it a distinct

advantage in these efforts. It helps the Company to create value that can be sustained over

the long term by offering consumers a wide variety of high quality, safe food products at

affordable prices.

Introduction about Products:

Nestlé India manufactures products of truly international quality under internationally

famous brand names such as NESCAFÉ, MAGGI, MILKYBAR, MILO, KIT KAT,

BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also

introduced products of daily consumption and use such as NESTLÉ Milk, NESTLÉ

SLIM Milk, NESTLÉ Fresh 'n' Natural Dahi and NESTLÉ Jeera Raita.

Nestlé India is a responsible organization and facilitates initiatives that help to improve

the quality of life in the communities where it operates.

Introduction about Curd Market:

Curd is considered as one of the most important part of Indian food. Generally the

demand for curd is met with home made curd or by the curd supplied by unorganized

sector. Considering the huge business opportunity in curd market, various companies

launched their products in the market. The two prominent players in curd market in

Punjab are “Verka” and “Nestle”. Since the entrance of organized sector in curd market,

still the major chunk is being controlled by the unorganized sector. According to one

estimate, unorganized sector has (app.) 65% of the total market share, Verka has 30%

market share and rest is controlled by Nestle.

Information about Nestle Dahi:

Nestle entered the curd market in Punjab with following two variants.

1. Nestle Fresh ‘N’ Natural Dahi.

2. Nestle Fresh ‘N’ Natural Slim Dahi.

Product Details:

1. Nestle Fresh ‘N’ Natural Slim Dahi:

Nestle Fresh ‘N’ Natural Slim Dahi is the first low fat product in the category in India. It

is made from high quality pasteurized double toned milk and contains maximum 2% fat.

It not only tastes delicious but is also a good source of milk protein and calcium. This

product is completely natural and does not contain any preservatives. Following are the

features of this product.

First low fat Dahi in India.

It is 98% fat free.

It is Rich source of Calcium – Every 100g serving of Fresh n Natural Slim Dahi

gives 35% RDA of calcium (as per ICMR, 2004).

It does not contain added preservatives.

It is hygienically prepared, untouched by hand.

Consistent quality and taste.

It can be used to prepare all the traditional Indian dishes like Lassi, Raita, Curries,

Kadhi or eaten in the same format.

Being packaged Dahi, it is safer and healthier compared to Halwaii Dahi.

Safe for children.

Product Weight & Pricing:

Pack Size Units Price per Unit (Rs.) Shelf Life

200g 24 15.00 15 days

400g 12 25.00 15 days

2. Nestle Fresh ‘N’ Natural Dahi:

The other variant launched by Nestle is Nestle Fresh ‘N’ Natural Dahi. It is 100% Fresh

and Natural and is made from fresh, high quality pasteurized toned milk. It has all the

goodness of natural Calcium and it is nutritious also. It comes in two different packs as

per the varying needs of the consumers.

Pack Size Units Price per Unit (Rs.)

200g 24 12.00

400g 12 22.00

Introduction about Ludhiana Market:

At present, in Ludhiana curd market has been Verka brand has 30% market share. The

unorganized sector has 65% market share whereas Nestle has 5% market share. Verka

has a strong network of its milk distribution booths & dealers. Any retailer can become

Verka’s dealer by giving Rs.10000 as security deposit. These dealers are in every locality

of Ludhiana & sell only Verka milk products.

Nestle’s Distribution Network in Ludhiana:

Presently, Nestle has 3 distributors in Ludhiana. These distributors supply nestle’s

products to retailers who in turn cater to entire Ludhiana market. Following are the

distributors of Nestle in Ludhiana.

1. M/s Inder Trading Company:

M/s Inder Trading Company is located at Shyam Nagar, Near Bus Stand,

Ludhiana. This distributor supplies Nestle’s products to around 450

retailers. Most of the retailers of this distributor are based at prime areas of

Ludhiana which include Dugri Road, B.R.S. Nagar, Aggar Nagar, Sarabha

Nagar, Model Town, Pakhowal Road, Radha Swami Road, Chet Singh

Nagar, Gill Road, Shimla Puri etc. The mentioned areas have the

population of rich people or the upper middle class people. M/s Inder

Trading Company has 3 salesmen who cater to the needs of 450 retailers.

The monthly turnover of this distributor is app. Rs. 70 lacs.

2. M/s B.M. Traders:

M/s B.M. Traders is located at Fieldgunj, Nimwala Chowk, Ludhiana.

This distributors supplies Nestle’s products to 450 retailers. The retailers of this

distributor have scattered from prime areas to backward areas like Habbowal, College

Road, Moti Nagar, Jamalpur, Chotti Habbowal, Dandi Swai Road, CMC Road,

Maligunj, Shivaji Nagar, Islam Gunj and fieldgunj etc. The mentioned areas have the

population mix of people having middle middle class and lower class. In this case, the

quantity of curd sold is lesser than the quantity sold by M/s Inder Trading Company

but the sales turnover of both distributors is same. The difference is covered up by

extra selling of other Nestle products like Maggi etc.

3. M/s Mirchi Traders:

M/s Mirchi Traders is located at Vaitgunj, Ludhiana. This distributor

supplies products to 300 retailers. The retailers of this distributor have located in

lower income class areas like Bajwa Nagar, Wasti Nagar, Sunder Nagar, Madhav

puri, Samrala Road, Division III, Chotti Sadak and Shiv puri etc. Since this

distributor has the retailers in lower income class areas, he does not stock the entire

range of products offered by Nestle like Dahi. In case he receives the order for such

type of products, then the same is being supplied by M/s B.M. Traders.

Nestle Curd Sale Analysis vis-a vis Competitor:

As it has already been mentioned that Nestle has 3 distributors in Ludhiana

who take care of entire Dahi sale through its retailer channel. Out of these 3

distributors, Dahi is being sold by only two distributors i.e. M/s Inder Trading

Company and M/s B.M. Traders. M/s Mirchi Traders does not have the stock of curd

but he meets the order through M/s B.M. Traders. Following are the sales figures of

Nestle for the last four months.

(In cases)Month Inder Trading Co. B.M.Traders TotalApril 487 49 536May 485 47 532June 620 45 665July 478 84 562

Following is the graphical presentation of the sales figures of Nestle Curd.

Sales Figures of Nestle Curd

487 485

620

478

49 47

45

84

0

100

200

300

400

500

600

700

April May June July

Month

No

. of

Cas

es s

old

B.M.Traders

Inder Trading Co.

It is evident from the graph that the major chunk of Nestle Dahi Sale in

Ludhiana comes from M/s Inder Trading Company. It is because of the fact that the

retailers of M/s Inder Trading Company are based in areas having population of rich

people and upper middle class people. As compared to that, the retailers of M/s B.M.

Traders are based at areas having population of poor people and middle middle class

people.

Nestle Sale analysis vis-à-vis competitor Sale:

Since there is huge business opportunity in Dahi market, hence Nestle is not the

only player available in this field. The major competition for Nestle comes from

unorganized sector & Verka.

As far as organized sector is concerned, the competition is from Milkfed Dahi

under the brand name “Verka”. Apart from that, one more Dahi under the Brand name

“Uttam” has been launched in Ludhiana.

In Ludhiana, Verka has captured around 30% of total market share where as

unorganized sector has around 65% market share. Nestle has the market share of around

5% of the Dahi market in Ludhiana.

Following is the tabular presentation of Dahi Sale of various brands in Ludhiana.

(In Cases)Month/Brands Nestle Verka

April 536 3000May 532 3200June 665 3500July 562 3100

Following is the graphical presentation of the sales data.

Competitor Dahi Sale

536 532 665 562

3000 32003500

3100

0

500

1000

1500

2000

2500

3000

3500

4000

4500

April May June July

Months

No

. of

Ca

ses

Verka

Nestle

Reasons for less market share:

It is evident from the above graphical presentation that Nestle Dahi sale in

Ludhiana is far less than the dahi sale of Verka. We have conducted a dealer survey to

find out the reasons for the same. Following reasons have been found out for Nestle’s less

market share as compared to Verka’s market share.

1. High Price:

The first and foremost reason for less market share is that there is huge

difference between the prices of Nestle Dahi and Verka Dahi. It is evident from the

following table.

Weight/Brand Nestle Price (Rs.) Verka Price (Rs.)

200Gm 12.00 7.50

400Gm 22.00 14.00

The price difference between the products of two brands is clear from the

above table. The prices of Nestle product is almost 60%-80% more than the prices of

Verka Products. Since the demand for curd is highly price elastic, consumers find more

value for money in Verka Dahi.

2. Lack of awareness regarding Nestle Dahi:

The other important reason for small market share is that retailers do not

have awareness regarding the availability of Nestle Dahi. Due to this reason, they are

concentrating on selling Verka Dahi, which is reducing Nestle market share. It is clear

from the fact that by creating the awareness regarding Nestle Dahi, the sale of M/s Inder

Trading Company has increased from 485 cases to 620 cases in the month of June. In the

month of July, the sale of M/s B.M. Traders has increased from 45 cases to 84 cases.

3. Lack of infrastructure:

Dahi is a perishable item with shelf life of not more than 1-2 days. Hence

proper storage of Dahi is must especially in summer season. But in case of Nestle Dahi,

many retailers do not have the fridge to store Dahi. Earlier they used to store Dahi in

fridges provided by cola companies but now, cola companies are insisting them to store

only their company’s products in the fridge. Due to lack of refrigeration facility, many

dealers are not able to store Nestle Dahi which reduces its sale.

4. Supply:

The other area of concern is supply of Dahi to retailers. Nestle Dahi is

supplied to distributors on bi weekly basis. Verka is giving daily supplies to its outlets.

Verka has around 25 booths & 250 dealers at every half km. Most of them do not stock

Nestle Dahi.

5. Unaffordable:

Since the demand for Dahi is highly price elastic, high price of Nestle

Dahi as compared to the prices of competitor Dahi has made the same unaffordable and

uncompetitive in the market. The lower middle class and middle middle class is finding it

cheaper to use either the competitor brand like “Verka” or use the home made Dahi as

compared to Nestle Dahi.

6. Mentality of consumer:

Dahi is an important part of Indian meal. Hence it is the mentality of the

consumers to have fresh Dahi in his meal. But in case of Nestle Dahi, the shelf life is 15

days. Although it can be used with in the period of 15 days, the consumer prefers to have

fresh Dahi. Due to this reason, either he prefers to purchase “Verka” dahi which is

supplied daily or purchases Halwaii Dahi which results in reduction of market share of

Nestle Dahi.

7. High Storage Cost :

Dahi is a perishable item which becomes sour if it is not properly stored.

The importance of proper storage of Dahi increases in summer season. Hence proper

refrigeration is required in order to keep it in edible condition. There is space constraint

in retailers visicoolers. In summers there are prolonged power cuts & retailers do not

have back up generators.

8. Lack of interest:

Due to the above mentioned reasons and low volumes of Nestle Dahi

business, distributors are generally not interested in selling Dahi. Hence they are not

placing the order for Dahi as per market potential which in turn reduces the sale and

market share of Nestle Dahi.

SWOT ANALYSIS

Before formulating strategy to increase sale and market share of Nestle Dahi in

Ludhiana, we need to go for the SWOT analysis of the company and its products. SWOT

anaysis is nothing but the analysis of Strengths, Weaknesses, Opportunities and Threats

of a company. By SWOT analysis, appropriate positioning of the product can be done.

Following is the SWOT analysis for Nestle Dahi.

Strengths:

1) Reputed Brand Name:

The main strength of Nestle Dahi is the Nestle Brand name itself. Nestle

company is known for its quality milk made products all over the world. All over the

world, people have trust in Brand name “Nestle”. Even the trademark of the company

“Birds in a nest” represents the values namely the values of security, maternity and

affection, nature and nourishment, family and tradition.

2) Household Item: Dahi is considered to be a household item which is used all over the

country by one way or another. Hence there is huge demand for Dahi all over the

country. Nestle has the opportunity to tap the market. The other advantage for Nestle

is that it has expertise in supplying household consumable items which are considered

to be of good quality all over the world.

3) Strong Distribution Network:

The other strength of Nestle is its strong distribution network. Nestle has

appointed distributors who supply its products through their own channel of retailers.

In Ludhiana alone, Nestle has 3 distributors who cater the needs of around 1100

retailers. Due to this strong distribution network, the targeted segment of people can

easily be penetrated but due to cool chain requirements they have to bear additional

cost.

4) Hygienic Products: Dahi prepared by Nestle is hygienic in nature. It is prepared in automated

plants. In comparison to that, Dahi prepared by unorganized sector is prepared in

traditional way and it is not as hygienic because it is touched by hands. Hence Nestle

Dahi is more nutritious and safer for health.

Weaknesses:

1) High Prices:

The first and foremost weakness of Nestle Dahi is that it has been priced at

higher end as compared to its competitors. Its prices are 60% - 70% more as

compared to its nearest competitor. Since the demand for Dahi is highly price elastic,

people prefer to use other brands available in the market or dahi from unorganized

sector rather to use Nestle Dahi. Hence high prices hamper the growth of Nestle Dahi

sale.

2) Not easily available:

Although Nestle has the strong distribution channel, still it is not able to

reach at every place. Hence Dahi is not easily available at every place. Even in

Ludhiana, where Nestle has strong distribution network, Dahi is not available at all

localities which hampers its growth.

3) Untapped Market:

Nestle has targeted rich, upper and middle middle income group class for

its Dahi which is available in urban areas. With the growth of Indian economy, this

class is also available in rural and semi-urban cities. Bur Nestle is still not able to tap

the market of rural and semi-urban cities. It has also hampered the growth of Nestle

Dahi.

Opportunities:

1) Untapped Market:

The future prospectus of Nestle Dahi is quite bright. Dahi is considered to

be a household item and it is being used all over the country by one way or another.

Hence there is huge demand for Dahi. It gives the ample opportunity to big

companies like Nestle to enter in the market with branded products, which are not

only hygienic but nutritious also.

2) Tapping new avenues:

Nestle has the opportunity to find out new avenues and tap them. It has

successfully tapped and entered the Institutional Market like Hospitals, colleges for

Dahi sale. These can create huge demand for Dahi and hence can boost sale and

market share.

Threats:

1) High Prices:

The first and foremost threat for Nestle Dahi is its high prices than the

prices of the competitor Dahi. Nestle has to compete with unorganized sector and

with organized sector like “Verka”. They are selling Dahi at the prices which are far

less than the prices of Nestle Dahi. Since the demand for Dahi is highly price elastic,

it reduces the interest of the customer in Nestle Dahi which results in reduction of

sale of Nestle Dahi.

2) Stiff Competition:

Nestle has to compete with Branded products as offered by Verka as well

as with the unorganized sector. Both these sectors are giving stiff competition to

Nestle in Dahi market in terms of prices and quality of Dahi. The prices of dahi of

both these sectors are far less than the prices of Nestle Dahi, which distracts the

customer from Nestle Dahi.

3) Insufficient distribution channel:

Although Nestle distribution channel is quite strong in Ludhiana but still it

is not as sufficient as it should have been. It is clear from the fact that Dahi is not

available at all places in Ludhiana.

4) Loss of interest of Distributor:

Dahi is a perishable item which needs to be properly stored in a cool

place. Hence proper storage facility is required for storage and preservation of Dahi.

Most of the retailers of Nestle do not have storage facility. In case, they have the

storage facility, then they have to spend huge amount on its overheads like electricity

bill. Apart from that, the margin in Dahi is not sufficient which can cover the cost

incurred on Dahi. Apart from that, the supply of Dahi is on bi weekly basis, which

customer is not ready to accept. All this results in decrease in demand for Nestle

Dahi.

SUGGESTIONS

Based on the above mentioned reasons for less sale and market share of Nestle

Dahi in Ludhiana, I am giving the following suggestions.

1. The distribution channel should be broadened. More retailers have to be

brought under coverage so that each and every area of Ludhiana should be

covered.

2. The customers as well as the retailers do not have awareness regarding the

availability and benefits of Nestle Dahi. It is advised that advertisement

campaign should be there in Ludhiana to create the awareness of Nestle Dahi.

The mode of advertisement may be newspapers, cable T.V, posters in retailers

shop or free samples to retailers.

3. In order to prompt the sale of Nestle Dahi, there may be a promotional scheme

in Ludhaina. This promotional scheme may be free gift on purchasing the

stipulated quantity or discount in prices.

4. Since consumers prefer to use fresh Dahi, it is advised that Dahi should be

supplied on daily basis. Once awareness is created that the shelf life of Nestle

Dahi is 15 days, then supply may be resorted back to weekly basis depending

upon the demand for Dahi.

5. Some of the retailers of Nestle Dahi does not have fridge in the shop. Hence

either company should provide them fridge for proper storage of Dahi and

other Nestle Products.

6. The price of Nestle Dahi is quite high than the prices of dahi of competitors.

Hence it is advised that the cost components of Nestle Dahi should be

analyzed and prices should be reduced.

Conclusion

Nestle is known as one of the most reputed companies in the world. The

products of Nestle are considered to be of high quality all over the world. Due to

goodwill and reputation earned by Nestle, all the products are doing fairly well.

It is true to say that Nestle has launched a very nutritious product in Indian

market in the form of Dahi. The taste and quality of Nestle Dahi is unbeatable, which

can create wonders in Indian Dahi market. But consumer awareness is required in

order to make this product a success in the market. Since the demand for Dahi is

highly price elastic and consumers do not have awareness regarding the benefits of

Nestle Dahi, they find more value for money in competitor’s Dahi.

Once awareness is created among the consumers regarding the benefits of

Nestle Dahi for them and their family, I am sure that there will be no looking back for

this product.

Dealer FeedDbeack Form1. Name of the Dealer:

2. Address of the Dealer:

3. Contact Person:4. Nestle Products Stored:

5. Whether it includes Curd: Yes [ ] No [ ]

6. If yes, No. of cases sold per month:

200Gm [ ]400Gm [ ]

7. Response in the market:Good in taste [ ]Overpriced [ ]Any Other _________________________________________

8. Complaints: _________ ___________________________________________________________________________________________________

9. If No, whether you want to deal in curd: Yes [ ] No [ ]

10. If Yes, Order for curd (in cases)

200Gm [ ]400Gm [ ]

11. If No, Please specify the reason Not Interested [ ]

High Price [ ]Less Margin [ ]Improper Supply [ ]No Infrastructure [ ]Unaffordable [ ]Lack of Knowledge [ ]Others_________________________________________________

12. What is the duration of Dahi supply? Daily [ ] After 2 days [ ] Any other________

13. Are you satisfied with the supply of Nestle Dahi? Yes [ ] No [ ]