SWOT analysis of Nestle

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This is a Nestle S.A. SWOT analysis for 2013.

Company background

Name	Nestlé S.A.
Industries served	Food processing
Geographic areas served	Worldwide
Headquarters	Switzerland
Current CEO	Paul Bulcke
Revenue	CHF 92.2 billion (2012)
Profit	CHF 10.6 billion (2012)
Employees	328,000 (2012)
Main Competitors	Unilever NV, Hershey Foods, Kraft Foods, Cadbury Schweppes, and GROUPE DANONE

Nestlé is the world's leading nutrition, health and wellness company based in Switzerland. It is the largest food company in the world measured by revenues. Nestlé's sells baby food, breakfast cereals, coffee, confectionery, dairy products, frozen food, pet foods, yoghurt and snacks. It owns several major consumer brands such as Stouffers, Nescafe, Kit-Kat, Carnation, Nestlé Water, and many others.
You can find more information about the business in its official website or Wikipedia’s article.

SWOT

Nestle SWOT analysis 2013
Strengths	Weaknesses
Unmatched product and brand portfolio R&D capabilities Distribution channels and geographic presence Competency in mergers and acquisitions Brand reputation valued at $7 billion	Inability to provide consistent quality in food products Weak implementation of CSR
Opportunities	Threats
Increasing demand for healthier food products Acquiring startups specializing in producing well-being products Establishing new joint ventures	Food contamination Trend towards healthy eating Growth of private labels Rising raw food prices

Strengths

Unmatched product and brand portfolio. The business offers one of the widest portfolio of food and brewery products in its sector. It also operates 29 brands that earn more than $1 billion in annual revenues. With more than 8,000 products it is hard for any other corporate to compete against Nestlé.

R&D capabilities. Nestlé invested more than $2 billion in R&D in 2011. It’s introducing new and redesigned products every year, strengthening firm’s competitive advantage.

Distribution channels and geographic presence. Nestlé runs in more than 100 countries and has extensive distribution channel all over the world, which supports its operations globally.

Competency in mergers and acquisitions. Over the years Nestlé has been forming successful partnerships and acquiring other companies in order to grow and maintain its leadership in the market.

Brand reputation valued at $7 billion. Nestlé is known almost everywhere and has a reputable brand for its products that are used by millions every day.

Weaknesses

Inability to provide consistent quality in food products. Nestlé has been recalling many products from trade due to food contamination or poor quality supplies. This does not only hurt firm’s sales but its image as well as the business is unable to control quality of the products.
Weak implementation of CSR. The company has announced and is involved in many programs that aim to make company more eco-friendly and improving the working conditions of its suppliers. Still, Nestlé receives a lot criticism over the effectiveness of its programs.

Opportunities

Increasing demand for healthier food products. The trend of buying and consuming only healthy food products is a major shift in consumer tastes and opens up an immense market for companies. Currently, Nestlé tries to introduce more healthy food products in response to the trend.
Acquiring startups specializing in producing well-being products. Many new startups are forming and introducing new products for well-being or revolutionizing the ways those products are made. Startups are cheap and can easily be acquired. Nestlé is focusing on providing more well-being products and this is a great opportunity to expand its portfolio.
Establishing new joint ventures. Nestle is already involved in many successful partnerships with major world companies like The Coca-Cola Company and Colgate-Palmolive.

Threats

Food contamination. Although it is Nestle’s responsibility to run thorough quality checks of its products, the company had been reportedly providing contaminated food or other products to the market. Such actions hurt company’s reputation and result in losses.
Trend towards healthy eating. Nestlé is a major supplier of chocolate and chocolate drinks that have high level of calories and due to changing customer habits, will experience decline in demand.
Growth of private labels. The growing number of supermarkets and other retailers are introducing their own label products that cost less and can easily compete with Nestlé’s product portfolio.
Rising raw food prices. With an overall growth of world economy and population, the demand for raw food will rise. The result of that will be higher material costs and squeezed margin for Nestlé.

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