SWAT Analysis
SWAT Analysis
SWAT Analysis
Muhammad Najeeb
20166658
SWAT Analysis
Nestlé sells 2000 different brands over 7 food and beverage categories. The
company’s main products are: powdered and liquid beverages; milk products, ice
cream; confectionary and pet care products.
It owns several major consumer brands such as Nescafé, Nestea, Nestle, Purina,
KitKat and Vital, including many other prominent brands.
In 2018, financial performance of Nestle was stronger compared to the last year. The
food and beverages industry has seen several major changes happening within a
decade. Apart from growing health consciousness and changing food habits of
consumers, brands like Nestle are also facing higher competitive and regulatory
pressure.
STRENGTHS
Nestle is a highly-diversified company operating in many different markets and
sectors of those markets.
The variety of brands gives Nestle a strong ability to weather economics because it
serves many different segments of the market.
It has well-established relationships with other powerful brands, including Coca-Cola,
Colgate Palmolive and General Mills.
Nestle owns some of the world’s most recognized and trusted brands. Some families
have used its products for generations. Gerber has historically been one of the most
trusted brands of baby food in the United States.
It has strong research and development capabilities that are growing.
Nestle has strong relationships with retailers.
It includes well-established brands with a large amount of market share in some of the
largest national economies, including Europe and the United States.
WEAKNESSES
In India, Maggie was recently banned because it was found to contain additives which
were harmful. This affected the brand name of Nestle as well as Maggie big time.
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SWAT Analysis
However, it has been relaunched recently and Nestle is trying to convince people
about the quality of Maggie.
It has many brands under the same umbrella group so managing such large number of
individual brands can create conflict of interest.
Although Nestle is global food giant but it got into controversies over the years like
Nestle baby formula boycott. Child labour by suppliers, Chocolate price fixing etc.
which resulted in negative word of mouth.
OPPORTUNITIES
Growth in online retail could open up new distribution channels such as Amazon
Prime that can bypass traditional retailers.
Due to stable political scenario, improved literacy rate & controlled inflation,
disposable income of the people is increasing there by resulting into upsurge
in demand & changing their lifestyle.
Growing middle classes in nations such as China and India create larger and broader
markets for Nestlé’s products.
Increased disposable income in countries like China could increase the demand for
luxury items like bottled water, ice cream and pet food.
Changes in lifestyle, such as longer work hours, more women in the workforce, and
more single-person households, increase the demand for pre-packaged foods.
Increased mobility and car ownership increase the demand for candy, bottled water
and snack foods in nations like China.
Increased interest in health and nutrition could increase demand for some Nestle
products, such as energy drinks.
Maggie oats or other such healthy breakfast alternatives have a big time future as most
breakfast alternatives are heavy and people are becoming more health conscious.
Nestle needs to do more market penetration with regards to its Cereals.
Nestle is already engaged in partnerships with a number of major companies, such as
Coca-Cola, and several others, opening doors of opportunities for the company. It is
one of the main shareholders of L’Oreal, the world’s largest cosmetics so partnering
with other food giants will help the company in further growth.
Recent outcry of Maggie Noodles in India for lead presence like issue will create
hindrances in the future growth of the company. So in order to handle these health
issues Nestle must invest in R & D further to come up with more hygienic food
products.
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SWAT Analysis
1. With increasing number of local & national players it’s becoming very hard for
the companies to differentiate themselves from others. There is also threat from
counterfeit products destroying its brand image in the market.
2. Increasing price of commodities will result in further increase in the price.
Further increase in price will result in decrease in sales, margins & brand
switching.
3. The growing use of new retail channels such as Amazon Prime and dollar
stores may not favor traditional retail products.
4. With highly diversified consumer goods market where there are lots of brands
claiming different sorts of benefits, it’s very difficult for consumers to stick to a
particular brand & hence results into brand switching where consumer got power
to select a brand based on several factors like availability, reference group
recommendation, preference & price.
Despite the threats, Nestle still owns some of the world’s best-recognized and most
profitable food brands. Unfortunately, it faces a dramatically-changing grocery market
in which traditional brands are losing much of their effectiveness. Such brands are
heavily dependent upon traditional advertising and marketing strategies such as
television commercials, which are often ineffective in today’s world.
Changing patterns of consumer behaviour, such as the demand for more natural food
in Europe and the United States and increased spending on take-out and restaurant
food, could be a greater threat to Nestle. It might have to create products or revamp
brands simply to maintain market share.
CONCLUSION:-
Nestle is a global brand of food and beverages. In 2018, it acquired impressive sales
and revenues. The growth of the brand can be attributed to its focus on healthy foods
and beverages and its marketing strategy. Nestle invests a lot in marketing and sales as
well as research and development. The company has brought several iconic products
including Kitkat, maggi and Nescafe to the market. In 2018, its sales from ecommerce
channels have also grown. In future, the company must focus on bringing healthier
products to find faster growth. While competition in the food and beverages industry
has grown, investing in healthier products and innovation can help at growing sales
and customer base.