Global MBA

Assessment Submission

MBG771 – Strategy Formulation

Plant-based dairy alternatives/Product for the NZ market.

Name:- Aditya Nair

Student ID :- 22386426
Executive summary
1. Industry analysis
1.1 Industry and Sector performance analysis
1.2 Macro environmental analysis
1.3 Competitor analysis
1.4 Industry forces analysis
2. Opportunities and Threats
3. Reference List
4. Appendix
4.1 Industry and sector performance
4.2 PESTEL analysis
4.3 Competitor analysis
4.4 Industry forces - Porter's five forces analysis
4.5 Scenario analysis – Scenario Cube
4.6 Blue Ocean Strategy Canvas
4.7 Salience model
4.8 Corporate governance issues identification

4.9 Blue Ocean Four Actions Framework

Executive Summary:

Within the burgeoning New Zealand plant-based dairy sector, an in-depth exploration the dynamics
opportunities that emerged from 2018 to 2022 and sale projection reaching NZD 268.3 million by 2022
reveals a noteworthy demand surge for plant-based dairy products / alternatives. This surge signifies
lucrative investment prospects and expansion avenues within this sector.

To encapsulate, the comprehensive analysis furnishes strategic blueprint for Nestle's active engagement
in New Zealand's plant-based dairy domain. The harmonization of these insights fosters a holistic
comprehension of market intricacies. As Nestle navigates the terrain, capitalizing on opportunities on
mitigating threats, it is well-positioned to carve a distinctive presence by harnessing its global proficiency
for contributing to the evolution of New Zealand's dynamic plant-based dairy market.
Introduction:

This report provides an in-depth analysis of the New Zealand business environment and its impact on
Nestle, a global leader in the food and beverage industry. We aim to offer strategic insights to assist
Nestle in navigating this dynamic market.

1.1 Industry and Sector Performance Analysis:

1.1.1 Sales Growth Trends (2017-2022):

Over the past five years, New Zealand has experienced significant sales growth in various product
categories, indicating a robust market. Key areas of growth include:

A. Dairy Products: New Zealand's strong agricultural industry has driven increased demand for dairy
products. Nestle, with its diverse dairy-based product portfolio, is well positioned to capitalize on this
trend.

B. Healthy Snacking: The global trend towards healthier snacks is evident in New Zealand, providing
Nestle with opportunities to expand its range of nutritious snacks.

C. Plant-Based Alternatives: The rising popularity of plant-based products aligns with Nestle's initiatives
in the plant-based food sector, offering substantial growth potential.

1.1.2 Market Composition

Supermarkets and hypermarkets play a pivotal role in shaping the New Zealand market. These retail
channels dominate product distribution, and their prominence stems from various factors, including:

A. Convenience

Supermarkets and hypermarkets offer one-stop shopping experiences, allowing consumers to find a wide
range of products under a single roof. The convenience factor greatly influences consumer choices, as
shoppers seek efficient and time-saving options.

B. Variety

These retail giants provide extensive product selections, catering to diverse consumer preferences.
Nestlé can leverage this diversity by ensuring its products are readily available and strategically
positioned within these retail channels.

C. Consumer Trust

Supermarkets and hypermarkets often enjoy a high level of consumer trust. Nestle’s commitment to
sustainability and product quality aligns with the values of these retail partners, strengthening its
position within their ecosystems.
1.1.3 Future Sales Projections (2022-2027):

Continued growth is expected in New Zealand's market due to several factors:

A. Health and Wellness: Nestle's focus on healthier products aligns with the health-conscious
preferences of New Zealand consumers.

B. Sustainability: Nestle's commitment to sustainability resonates with environmentally conscious

consumers in New Zealand.

C. On-the-Go Lifestyles: Meeting the needs of time-constrained consumers with convenient products is
crucial for Nestle's future success.

1.2 Macro Environmental Analysis:

Political Environment:

The upcoming general election introduces political uncertainty, potentially impacting Nestle's operations
through regulatory changes. Proactive engagement with policymakers is crucial.

Economic Challenges:

Inflation and slower economic growth can affect consumer behavior. Nestle should consider pricing
adjustments and cost-effective marketing strategies.

Labor Market:

The shortage of skilled labor requires Nestle to focus on talent acquisition, development programs, and
competitive compensation packages.

Wealth Distribution and Education:

Understanding wealth distribution guides pricing strategies, while targeted marketing can address
educational disparities.

Technological Advancements:

Embracing digital marketing and expanding e-commerce presence is essential to engage tech-savvy
consumers.

1.3 Competitor Analysis:

Market Share:

Identifying the dominant player and their strategies is crucial for Nestle to compete effectively.

A. Dominant Player Profile: Analyzing the dominant player's product portfolio, distribution, marketing,
and customer engagement strategies is essential.
B. Market Segments: Identifying key market segments where the dominant player has influence can
reveal opportunities for Nestle.

1.3.1 Competitive Brands:

Studying successful brands can provide valuable insights for Nestle.

A. Success Factors: Analyzing the strategies of successful brands, including product innovation and
marketing, can inform Nestle's own strategies.

B. Market Niche: Identifying niche markets where successful brands have thrived can guide Nestle's
efforts to capture similar segments.

1.4 Industry Forces Analysis:

Nestle's strategic initiatives aligning with the New Zealand market include:

1.4.1 Sustainability and Trustworthiness:

A. Ethical Sourcing: Nestle's commitment to ethical sourcing practices aligns with consumer demand for
responsible and sustainable products.

B. Environmental Responsibility: Nestle's efforts to reduce its environmental footprint resonate with
New Zealand's environmentally conscious consumers.

Diversification:

A. Healthier Product Lines: Nestle's introduction of healthier options aligns with New Zealand's health
and wellness trends.

B. Adaptation to Local Tastes: Customizing products to local preferences enhances Nestle's appeal.

1.4.2 Distribution Partnerships:

A. Strategic Alliances: Nestle should continue to build alliances with key retail partners.

B. E-commerce Integration: Optimizing the online shopping experience is essential in the digital age.

Eco-friendly Initiatives:

A. Packaging Innovation: Nestle should continue innovating sustainable packaging solutions.

B. Consumer Education: Educating consumers about eco-friendly packaging enhances brand loyalty.

Accessibility for Busy Consumers:

A. Product Development: Nestle should invest in on-the-go product options.

B. Marketing Strategies: Tailoring marketing to highlight convenience is crucial.

1.4.3 Efficiency and Quality:

A. Quality Assurance: Nestle should maintain rigorous quality standards.

B. Cost Management: Identifying cost-saving opportunities without compromising quality is essential.

Responsible Sourcing:

A. Transparency: Transparent sourcing practices build consumer trust.

B. Local Sourcing: Exploring local sourcing options supports sustainability goals.

Opportunities and Threats:

Opportunities:

Hand holding of Small and Medium Businesses: Nestle can collaborate with local enterprises to leverage
a fund dedicated to supporting small and medium-sized businesses.

Programs and Plans growth initiative: Participation in growth programs offers Nestle opportunities for
diversification and expansion.

Business Environment Stability: The stable business environment in New Zealand provides a foundation
for long-term planning and investments.

Threats:

Uncertainty in Politics: The upcoming election introduces political risks, requiring Nestle to monitor
policy changes and engage with policymakers.

Challenges in Economy: Inflation and slower economic growth can disrupt consumer spending patterns,
necessitating pricing adjustments and cost-effective strategies.

Shortage of skilled labor: The shortage of skilled labor requires Nestle to focus on talent acquisition and
retention strategies.

Risings property prices: Rising property prices can affect various aspects of Nestle's business, requiring
effective cost management and strategic decisions.

Conclusion:

In conclusion, New Zealand's dynamic business environment offers both opportunities and challenges for
Nestle. By aligning its strategies with market insights, embracing sustainability, and remaining adaptable,
Nestle can thrive and contribute positively to New Zealand's growth. As the business landscape evolves,
Nestle's innovation and consumer-centric approach will be key to its success in New Zealand

References

1. Euromonitor International, 2nd June 2023, Pest Analysis, 1 to 8

2. Euromonitor International, September 2022, Plant-Based Dairy in New Zealand, Euromonitor

International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

3. Health 2009. 2008-2009 New Zealand Adult Nutrition Survey held at 2009

4. J M 2017. 10 Key Trends in Food, Nutrition and Health, 2017.

Hyperlinkhttp://www.newnutrition.com/report/showReport/1540

5. Lynch KM, 2016. Brewers' spent grain: a review on food and health. Journal of the Institute of Brewing

6. Sutton K, May 2018, Opportunities in plant-based foods – PROTEIN, May 2018

7. Market Research Reports, 26th January 2023, Competitive Analysis of the Global Plant Based Dairy
Market with Porter's Five Forces

8. Othman, S., 2014,

9. Bhasin, Hitesh. Marketing91, 16 Aug. 2018,.

10. Statista, (n.d.), Food - New Zealand (insert the link), Deakin Database - Statista, accessed on Sep 2,
2023
Appendix

4.2 PESTLE Analysis: New Zealand

Pestle
Political Economical Social Technology Legal Environmental
1. Changes in 1. An increase in middle 1. Shortage of 1. Innovation of products 1. Mil Formula Scandal 1. Conversation of water
countries class skilled workforce via technology 2. Child slavery 2. Packaging of products
Regulation 2. Support from state 2. Expentency of 2. Engagement center for 3. Unhealthy Prodcut 3. Renewable energy
2. Lobbying in for economic life rising consumer Portfolio caused few
various countries development 3. Support for 3. Improving the controversy
3. Short term 3. Sloe raise of economy farmers for there connectivity
instabilty due to 4. Sloe FDI investment wellbeing
Elections from countries 4. Healthy ageing
4. Corruption Free
country

Source: Euromonitor International Industry Forecast Model

Implication To The Significance (A)  likelihood  (B Total

Elements Factors
Organisation Rating 1-5 ) Rating 1-5 (A)*(B)
URL/Source
Government policies and - Changes in regulations can 4 3 12
regulations affect operations.
Political
- Political instability may 3 4 12
Upcoming elections
impact business strategies.
- Economic conditions 4 3 12
Inflation and economic growth influence consumer
Economic spending.
- Exchange rate fluctuations 3 4 12
Exchange rates
can affect profitability.
- Aligning products with 5 3 15
- Consumer preferences
preferences is essential.
Societal
- Meeting health-conscious 5 4 20
- Health and wellness trends https://www.euromonitor.com/pest-
demands is crucial.
analysis-new-zealand/report
- Advancements in food - Staying technologically 4 4 16
technology competitive is vital.
Technological
- Online presence and sales 4 4 16
- E-commerce growth
channels require attention.
- Aligning with eco-friendly 5 4 20
- Sustainability practices
practices is essential.
Environmental
- Adhering to environmental 4 3 12
- Climate change regulations
regulations is imperative.
- Compliance with food 5 3 15
Food safety regulations
safety laws is non-negotiable.
Legal
- Protecting intellectual 4 3 12
Intellectual property protection property is vital.
4.3 Competitor Analysis

Sales Forecast of Plant-Based Dairy by Category: Volume 2022-2027

  2022 2023 2024 2025 2026 2027
Plant-based Cheese (tons) 0.1 0.2 0.3 0.5 0.9 1.5
Plant-based Yoghurt(tons) 0 0.1 0.1 0.1 0.1 0.1
Other Plant-based milk (million liters) 12.3 14.6 17.4 20.1 22.5 24.8
Soy Drinks (million liters) 5.4 5.7 6 6.2 6.4 6.6
Plant-based Milk (million liters) 17.7 20.3 23.4 26.3 28.9 31.4
Plant-based Dairy (not calculable)            
Source :- Euromonitor International September 2022

Sales Forecast of Plant-Based Dairy by Category: Volume 2022-2027

  2022 2023 2024 2025 2026 2027
Plant-based Cheese (tons) 0.1 0.2 0.3 0.5 0.9 1.5
Plant-based Yoghurt(tons) 0 0.1 0.1 0.1 0.1 0.1
Other Plant-based milk (million liters) 12.3 14.6 17.4 20.1 22.5 24.8
Soy Drinks (million liters) 5.4 5.7 6 6.2 6.4 6.6
Plant-based Milk (million liters) 17.7 20.3 23.4 26.3 28.9 31.4
Plant-based Dairy (not calculable)            

Source :- Euromonitor International September 2022

 4.4 Industry forces - Porter's five forces analysis

Plant based Dairy : Porters Five Forces Analysis

Source – Market research report, January 2023

  Factors Implication Threat Score

URL /Source
High capital requirements for
Barriers to Entry 4 4
production facilities.

Compliance with food safety

Government Regulations 5 5
regulations is necessary.
Threat of New Entrants
Existing companies benefit from
Economies of Scale 4 4
cost advantages due to scale.

Access to Distribution Existing players have strong

4 4
Channels relationships with retailers.

         
A limited number of suppliers
for specific plant-based
3 3
ingredients may increase
Number of Suppliers dependence.

Uniqueness of certain plant- https://www.euromonitor.com/plant-based-dairy-in-new-zealand/

Uniqueness of Inputs based ingredients may give 4 4 report
suppliers bargaining power.
Bargaining Power of
High switching costs for
Suppliers
specialized ingredients may
Switching Costs 4 4
reduce Nestlé's bargaining
power.

Concentration of key suppliers

Supplier Concentration 3 3
may increase their power.
Suppliers with strong brands
Supplier's Brand may have more bargaining 3 3
power.
         
Number of Buyers A large number of buyers may 3 3
Bargaining Power of reduce individual buyer power.
Buyers
Product Differentiation Differentiated plant-based dairy 4 4
 products may give Nestlé more
bargaining power
Informed buyers may have
Buyer Information 3 3
more power in negotiations.
Availability of substitute
Substitute Availability products may increase buyer 4 4
power.
Buyers with strong brands may
Buyer's Brand 3 3
have more bargaining power.

         
Availability of alternatives may
Availability of Substitutes pose a threat to plant-based 4 4
dairy products.
Price-sensitive consumers may
Price Sensitivity readily switch to cheaper 4 4
substitutes.
Shifting consumer preferences
Threat of Substitutes Consumer Preferences towards substitutes may impact 3 3
demand.
High-quality substitutes may
Substitute Quality 3 3
pose a more significant threat.
High switching costs for
Switching Costs consumers may reduce the 3 3
threat of substitutes.
         

A high number of competitors

Number of Competitors 4 4
can intensify rivalry.

Rapid industry growth may lead

Growth Rate of Industry 4 4
to increased competition.
Strong differentiation of Nestlé's
Intensity of Competitive
Product Differentiation plant-based dairy products can 3 3
Rivalry
reduce rivalry.
High exit barriers can make
Exit Barriers 3 3
competition more intense.
Overcapacity in the industry can
Industry Capacity lead to price wars and increased 4 4
rivalry.

4.5 Scenario Analysis

 Independence
Scenario Impact Likelihood
Value URL /Source
High Regulatory - Significant Moderate High https://www.statista.com/study/48470/new-
Changes impact on zealand/
compliance
costs and
operations.
Economic Downturn - Reduced Moderate High
consumer
spending and
demand for
premium
products.
Health and Wellness - Increased High High
Trend demand for
healthier
plant-based
options.
Sustainability Emphasis - Positive High High
impact on
brand image
and consumer
appeal.
Technological - High High
Advancements Opportunities
for enhanced
digital
marketing and
e-commerce.
Environmental - Need for Moderate High
Regulations increased
sustainability
efforts and
compliance.
Stringent Food Safety - Ensuring Moderate High
Laws compliance is
crucial to
avoid legal
issues.
Supplier Bargaining - Potential Moderate High
Power disruptions in
supply chains
and pricing
pressure.
Buyer Bargaining - Slight risk of Low Moderate
Power reduced
margins due to
buyer
demands.
Availability of - Potential Moderate Moderate
Substitutes competition
from
 substitutes
impacting
market share.
Intensity of - Increased Moderate Moderate
Competitive Rivalry competition
may lead to
pricing
pressure.

4.6 Blue Ocean Strategy Canvas

Variables Perception (Consumer) Wants Reason Source

(Consumer)
https://www.euromonitor.com/
Product Quality High-quality, safe, and Consistently Ensures satisfaction and trust plant-based-dairy-in-new-
reliable high-quality in the brand. zealand/report

products
https://www.euromonitor.com/
Taste Delicious and appealing Great taste and Taste is a primary driver of plant-based-dairy-in-new-
taste flavor purchasing decisions for food zealand/report

products.
https://www.euromonitor.com/
Price Affordable and value for Reasonable Consumers seek value for plant-based-dairy-in-new-
money prices and their money and budget- zealand/report

discounts friendly options.

https://www.euromonitor.com/
Health Benefits Nutritious and health- Healthy, low- Increasing focus on personal plant-based-dairy-in-new-
conscious calorie, or health and wellness. zealand/report

organic options
https://www.euromonitor.com/
Convenience Convenient packaging Easy-to-prepare Busy lifestyles demand quick plant-based-dairy-in-new-
and usage or ready-to-eat and convenient meal zealand/report

products solutions.
https://www.euromonitor.com/
Sustainability Environmentally friendly Sustainable Growing concern for the plant-based-dairy-in-new-
and sustainable packaging and environment and ethical zealand/report

sourcing consumption.
https://www.euromonitor.com/
Brand Trustworthy and Established and Trust in the brand based on plant-based-dairy-in-new-
Reputation reputable brand trusted brand past experiences and zealand/report

reputation reviews.
https://www.euromonitor.com/
Variety Diverse product Wide variety of Consumers appreciate plant-based-dairy-in-new-
offerings flavors and options to suit different zealand/report

choices preferences.
https://www.euromonitor.com/
Accessibility Readily available in Easy access Availability in preferred plant-based-dairy-in-new-
stores or online through various stores and online shopping zealand/report

retail channels platforms.

https://www.euromonitor.com/
Ethical Values Ethical and socially Support ethical Aligning with personal values plant-based-dairy-in-new-
responsible and socially and supporting ethical zealand/report

responsible practices.
brands
 4.7 Salience model

Stakeholders Impact Category URL /Source

https://www.euromonitor.com/plant-
Customers - Influenced by product quality, price, and External Stakeholders based-dairy-in-new-zealand/report
service.
https://www.euromonitor.com/plant-
Employees - Affected by work conditions, Internal Stakeholders based-dairy-in-new-zealand/report
compensation, and job security.
https://www.euromonitor.com/plant-
Investors - Impact on financial performance and External Stakeholders based-dairy-in-new-zealand/report
returns on investment.
https://www.euromonitor.com/plant-
Suppliers - Supply chain reliability and pricing External Stakeholders based-dairy-in-new-zealand/report
negotiations.
https://www.euromonitor.com/plant-
Regulators - Legal compliance and adherence to External Stakeholders based-dairy-in-new-zealand/report
industry regulations.
https://www.euromonitor.com/plant-
Competitors - Competitive dynamics and market External Stakeholders based-dairy-in-new-zealand/report
positioning.
https://www.euromonitor.com/plant-
Communities - Environmental and social responsibility External Stakeholders based-dairy-in-new-zealand/report
impact.
https://www.euromonitor.com/plant-
Non- - Influence on corporate social responsibility External Stakeholders based-dairy-in-new-zealand/report
Governmental and sustainability practices.
Organizations
(NGOs)
https://www.euromonitor.com/plant-
Media - Reputation and public perception External Stakeholders based-dairy-in-new-zealand/report
management.
https://www.euromonitor.com/plant-
Government - Regulatory impact, taxation, and public External Stakeholders based-dairy-in-new-zealand/report
policies.
https://www.euromonitor.com/plant-
Trade Unions - Labor relations and workplace conditions. External Stakeholders based-dairy-in-new-zealand/report
https://www.euromonitor.com/plant-
Shareholders - Ownership and influence on corporate External Stakeholders based-dairy-in-new-zealand/report
decisions.

4.8 Corporate governance issues identification

Primary Governance Board Analysis of Overall Source

Principal chain Compositio the Board Assessment
n Members' of the
Suitability Organizatio
n’s
Governance
System
Identify Outline the Describe Evaluate the Provide an https://www.nestle.com/investors/
the key hierarchy of the suitability of overall corporate-governance
individual governance compositio board assessment
or entity within the n of the members of the
that holds organization board of based on organization
 primary . This directors, their 's
authority includes the including qualification governance
within the roles and the number s, system,
organizatio responsibiliti of experience, highlighting
n. This es of various members, independen strengths,
may be a stakeholders their ce, and weaknesses
founder, , from qualificatio alignment , and areas
CEO, executives ns, roles with the for
chairman to board (executive, organization improveme
of the members to non- 's goals and nt. Consider
board, or shareholder executive), values. factors like
majority s. and any transparenc
sharehold notable y,
er. diversity or accountabili
expertise. ty, and
ethical
standards

4.9 Blue Ocean Four Actions Framework

Value Proposition Source

Eliminate Reduce Raise Create
https://www.nestle.com/sites/default/files/2023-
We eliminate We reduce energy We raise customer We create unique 03/creating-shared-value-sustainability-report-
2022-en.pdf
unnecessary costs. consumption. satisfaction. products.
https://www.nestle.com/sites/default/files/2023-
We remove 03/creating-shared-value-sustainability-report-
We enhance We explore market 2022-en.pdf
inefficiencies in We decrease operating costs.
product quality. opportunities
processes.
https://www.nestle.com/sites/default/files/2023-
We cut down 03/creating-shared-value-sustainability-report-
We minimize environmental We boost employee We cultivate brand 2022-en.pdf
environmental
impact. morale. loyalty.
impact.
https://www.nestle.com/sites/default/files/2023-
We say goodbye to We trim down inventory We drive We foster a 03/creating-shared-value-sustainability-report-
2022-en.pdf
redundancy. levels. innovation. competitive edge.
https://www.nestle.com/sites/default/files/2023-
We eliminate 03/creating-shared-value-sustainability-report-
We elevate brand We forge strategic 2022-en.pdf
guesswork with data- We cut waste generation.
reputation. partnerships.
driven decisions.