when was the last time you saw a cool person or thing? There is no lack of spotlight in this era. It especially prefers those star technology enterprises. Many discussions have nothing to do with the main business – how talented are Huawei’s talented teenagers, why the founders of Ningde era like Linghu Chong best, and where are Tesla’s sports cars sent to space now. Although the essence of cool is a kind of spiritual admiration, it is a kind of surprise, admiration and envy that the other party can do but I can’t. But in the era of information explosion, cool is often a visual sensory experience (non derogatory), such as colorful but harmonious and advanced packaging, fashionable models with expressionless faces, and beautiful performance stages Compared with the technology industry that is easy to be cool, some industries seem a lot dull, such as food and beverage. In particular, some old giants, compared with the new brands in the limelight, people seem to lose the enthusiasm to talk about them because they don’t feel cool enough. There are always exceptions, such as Coca Cola, which was born in 1886. When mentioning it, it is hard for most people to think that it is actually 135 years old. A generation will grow old, but Coca Cola seems to be young forever. Success seems to always reward brands that always catch young people. In the 2021 “world top 500 brands” ranking released by the world brand laboratory, Coca Cola is one of the only food and beverage brands in the top 20, ranking 11th, a full 9 higher than another brand. The list was founded by Robert Mundell, the 1999 Nobel Laureate in economics and the father of the euro. It has been released for 18 consecutive years. The ranking is based on three indicators: market share, brand loyalty and global leadership. Who’s the other one? Nestle, No. 20, was founded in 1867, 19 years older than Coca Cola. Um Nestle? Looks like it’s a good match for 154? It doesn’t mean Nestle is very old, but it feels like an experienced old man: steady, down-to-earth, warm and safe. Can the above list show that Coca Cola is the first in the industry? There are few either or standard answers in the real world. We might as well look at the tracking of Fortune magazine from another perspective. In the list of the “world’s top 500” based on “revenue”, Nestle is well deserved to be the first in the industry, with a revenue of nearly 20 billion US dollars.
this ranking is somewhat surprising. However, there is no reason why the public’s sense of Nestle as “the first in the industry” has declined. In recent years, the midfield war in China’s coffee industry has been in full swing, and many rising stars have attracted the attention of countless media and capital. However, as a coffee brand that dominated most people’s school days, Nestle often appears as a “loser” in many narrative contexts. Consumers generally think Nestle is not “cool”, and I used to think so. But when I read its 154 year history, I found that Nestle is not cool in recent years. In the more than 100 years after its birth, it has never had much to do with “tide” and “cool”, but this does not prevent it from ranking first in the industry for decades. Coffee is just the tip of the iceberg of Nestle’s business empire. Nestle produces and sells milk powder, ice cream, chocolate, condiments, mineral water, tea drinks, health products and even pet food. Almost all people and pets can eat and drink. Nestle not only has instant coffee for less than 1 yuan, but also has a bottle of high-end mineral water for about 20 yuan. Paris water and St. Peilu are also Nestle’s. It is also one of the largest agents of Starbucks and has the permanent sales right of its bagged retail business in the world. Nestle is even a minority shareholder of L’Oreal for decades. It just cashed out 64 billion yuan by reducing its holdings not long ago. Even the coffee business is contrary to most people’s intuition: Nestle not only handed over its best semi annual report in more than 10 years in 2021, but also praised the coffee business in China for “achieving strong double-digit growth”. Why is the performance of Nestle coffee, which is always described as “past style”, rising instead of falling? I think Nestle can play well for its own reasons – high cost performance of instant products + all-round development of four sub categories + numerous sales channels; But it is mainly because of the industry dividend – thanks to the efforts of investment institutions and coffee rookies, China’s coffee industry is growing rapidly, and more and more people drink coffee more and more frequently. But Nestle Nestle’s coffee business is not the protagonist of today’s story, more focused on “what can learn from old consumption” topic, bird’s eye view of the essence of Nestle’s century history of growth, the following will be around three core issues: or how small companies Nestle is killing and surviving? After becoming a giant, how did Nestle defend its huge business empire and dominate the industry for decades? How much impact does the brand not cool enough have on Nestle? The article is a little long. Let’s start with a few important conclusions. You can jump and read by yourself: 1. The first principle of the food industry: satisfy hunger, delicious, safe, convenient and emotional. 2. Even if you go to the non food industry, you should also ensure the mental cognition that the parent brand is “food”. 3. The main categories should not be abandoned, but should maintain a leading position for a long time. 4. Multi category + globalization + food safety, Minimize risks to maximize benefits
- From 1867 to 1945, the survival time was 88 years
- From 1946 to 1996, it took 50 years
- 1997 – now, the period of great wealth has been strong for 24 years
answer: on the one hand, we can try to avoid making disastrous wrong judgments on strategic issues. On the other hand, food is closely related to human life safety. Therefore, it is very important to build a “safe” brand image to win the trust of consumers. If consumers perceive that you still sell a lot of products that are very different from food under your brand, they will discount their trust in the brand. For example, Kraft will try to avoid mentioning its relationship with tobacco and alcohol in marketing (Kraft’s parent company is the world’s largest tobacco company). In China, consumers’ perception of Unilever is more of a daily chemical brand, but it is also one of the top ten food giants in the world. If an enterprise wants to develop in the food industry for a long time, it is very important to ensure the mental cognition that the parent brand is “food”, because this can maximize the sub brand and benefit from the brand power of the parent brand. At least in the food industry, such focus can definitely bring rich returns, because people have to eat when they live. Any industry may decline, but there is always a market for food. Nestle’s ranking first for decades is proof. In fact, Nestle also set foot in the wine industry in the 1970s and bought a winery, but it sold out within a few years. Even taking a stake in L’Oreal and acquiring Alcon, it has never shifted its main business to cosmetics and drugs with higher gross profit. More than 90% of Nestle’s annual revenue comes from food and beverage, of which food accounts for the absolute majority. Question: with so many food categories, why does Nestle never give up investment in coffee and milk powder? How?
answer: put aside the path dependence, the essential reason is that both of them are profit only and lose nothing. The former is because of addiction, while the latter is the engine and the strongest base of brand power – no food can make consumers feel safer, warmer and more reliable than baby food, and brand favor should start with dolls. Although many people feel that nestle coffee is a thing of the past, in fact, Nestle coffee’s performance has risen instead of falling, because it adheres to technology research and development and comprehensive layout. Nestle’s R & D gene has been strong since the development of hard technology baby rice noodles at that time. As for coffee, it took nearly a decade in the early years to develop instant coffee that can be produced on a large scale, and another decade in the 1980s to develop a capsule coffee machine. Nestle ranks first in the world in terms of instant and capsule. In order to maintain its absolute advantage, Nestle even took the initiative to become a competitor’s agent at a high price – it spent US $7.15 billion to buy out Starbucks’ bagged coffee business in 2018, and has the permanent right to sell Starbucks’ coffee beans, instant coffee and capsule coffee all over the world. In the instant coffee business (that is, the kind of coffee you can drink by unscrewing the bottle cap in a convenience store or supermarket), Nestle ranks first in China. Freshly ground coffee is indeed not Nestle’s strength, but as early as 2017, Nestle acquired 68% of the shares of the boutique chain coffee brand “blue bottle coffee” for $500 million. In addition, Nestle has long been in the upstream of coffee, and has its own coffee plantations and baking factories in many parts of the world. As for the milk powder business, it is another long story worth learning. However, the performance in China in recent years is indeed not very good. It has sunk four times in the sinking market over the years. It has even become the only region with negative growth in the global milk powder business in the third quarter of 2021, but it is still trying to repair it.
- 1) Raw material screening: place magnetic rod (which can adsorb metal) to remove impurities
- 2) Finished product inspection link: use X-ray machine and metal detector to detect defective products infiltrating metal foreign matters
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