NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

BACKGROUND OF HOST ORGANIZATION

EXECUTIVE SUMMARY

This is an internship report regarding the Confectionary Products of Nestlé including Kit Kat,

Polo and fox Candies. It starts with an introduction about Nestlé followed by the history of Nestlé. It

gives a briefing about all the brands of Nestlé.

This report also includes the market mix of the product. All the 4P’s of marketing mix for the

product has been discussed and explained to reveal the significance of its pricing, product, placing

and promotional activities along with the strength and weaknesses of the organization.

The report shows an internal architecture of the working of the Nestlé confectionary business.

It gives a detail about the supporting department that has helped the business in their daily working.

Also it discusses the objectives, policies of the organization along with their competitors at

national level. There are also some suggestions/recommendations for the business.

BCG matrix has also been included in this report to know about the current standing of brand in

Pakistani culture.

In the end, there is a briefing about the internship project that was assigned during the

required internship to me.

1

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

INTRODUCTION

Chocolates and candies are one of the best-loved foods everywhere in the world. These are

one of life's little pleasures. The attractive tastes and textures of chocolate and candies delight the

senses of all ages.

As far as Nestle chocolate Kit Kat is concerned, the product developed as Wafer Crisp, was

initially launched in London, UK in September 1935 as Rowntree's Chocolate Crisp. It became 'Kit

Kat' in 1937, two years before the Second World War.

Within two years of launch Kit Kat was established as Rowntree's leading product, a position

that it has maintained ever since. During the Second World War Rowntree Kit Kat was seen as a

valuable wartime food and advertising described the brand as 'What active people need'.

For most of its life Rowntree Kit Kat has appeared in the well-known red and white wrapper.

It did, however, change to a blue wrapper in 1945, when it was produced with a plain chocolate

covering due to a shortage of milk following the war. This blue packaging was withdrawn in 1947

when the standard milk chocolate Kit Kat was reintroduced.

Polo and Fox candies are also well known and favorite products for refreshment. In Pakistan,

Polo is now being imported from china after one year gap. Nestle Pakistan is producing Polo in china

with lighter weight than before. Fox candies are available in six different flavors, from which Nestle

fruit Fox is the most saleable and demanding candy.

2

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

HISTORY

Henri Nestlé founded Nestlé in 1866 in Switzerland. Nestlé means ‘little nest’ in Swiss

German. Nestlé first customer was a premature infant who could tolerate neither his mother’s milk

nor any other conventional substitute. Thus, Henri’s ultimate goal was to help fight the problem of

infant mortality due to malnutrition for which he developed a product combining various cow’s milk,

wheat flour and sugar and name it Farine Lactee Nestlé, which was the first product of Nestlé being

marketed in Europe.

In 1974, Jules Monnerat purchased Nestlé and collectively they launched a condensed milk

product of its own. In 1905, Nestlé got merged with Anglo-Swiss condensed milk.

After some time, when Nestlé got fully established and all its operation were properly

functioning in Europe and was gaining fame around Europe, then Nestlé decided to set up production

plants around the globe to ensure the growth of the organization and to become multinational.

The decision to set up industrial operation in new market needs a lot of research, as there are

various factors that effect the growth of the organization and turns out to be a loss for the company.

Such factors are as follows

The availability of raw material

Cost factor

Economic climate

Consumer purchasing power

Consumer tastes

The decision to become multinational turned fruitful for Nestlé and today Nestlé has its own

operations and products in America, England, India, Brazil, Australia, Pakistan, Hungary, France,

Belgium, Italy, Spain and various other countries around the globe.

3

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

DYNAMIC EXPANSION

The history of Nestle includes the development of many different products as well as

acquisitions, mergers and the purchasing of shares in companies, mainly abroad. Over the course of

the years, this enabled it to broaden its range of products and diversify its operations, while at the

same time strengthening the economic foundations of the company. Amongst the most important

acquisitions were Carnation in Los Angeles (milk, culinary products and pet foods) and more

recently Rowntree Mackintosh in York (chocolate and confectionery), Buitoni in Perugia (pasta) as

well as Perrier in France(mineral water). Nestle, which does 98% of its business outside Switzerland,

also has interests in non-food sectors, in cosmetics (a large share holding in L'Oreal) and ophthalmic

products (acquisition of Alcon Laboratories Inc.) while continuing to give priority to food products.

NESTLE TODAY

Nestle is now the world's largest food company. It is present on all five continents, has an

annual turnover of 74.7 billion Swiss francs, runs 509 factories in 83 countries and employs about

231,000 people the world over.

The Company owes its current status to the pioneering spirit inherited from its founders

which continues to inspire it, to its concern with quality and to its constant search for new ways of

satisfying man's nutritional needs.

Wherever possible, it sets up factories locally, employs personnel from the country concerned

and relies on indigenous raw materials. Its agricultural services provide assistance to improve the

quality and yield of the raw materials it uses. Much attention is devoted to professional training and

to the integration of the Company in its economic and social environment.

4

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

RESEARCH & DEVELOPMENT

Nestle, the world's biggest food Group, is also the global leader in the industry with regard to

Research and Development (R&D), No other food company matches the R&D presence of Nestle,

with a worldwide network of centers in 17 locations on four continents. No other food company

dedicates so many human and financial resources to R&D: an international staff of 3500 engaged in

the search for innovative new products and the renovation of existing ones. Year after year, Nestle

invests some 800 million Swiss francs into R&D as a major driving force of its double strategy: to

strengthen the Company's brands worldwide and to continue to support future long- term growth and

competitiveness through innovation and renovation.

At the threshold of this new millennium, Nestlé’s objective is to consolidate and strengthen

its leading position at the cutting edge of innovation in the food area, in order to meet the needs and

desires of consumers around the world, for pleasure, convenience, health and well being.

BUSINESS REVIEW

MILK COLLECTION

The core raw material of Nestle Milkpak is milk. Over the last twelve years, the Company's

prime concern has been to improve the quality and volume of milk for UHT processing and for other

milk based products. Driven by its commitment to quality and having realized that only self

collection could eliminate its dependence on poor quality milk available from outside sources, the

Company successfully established its own collection system and expanded its operations over a very

large milk shed area in Punjab. Owing to this tremendous growth in the volume of an extremely high

quality raw milk, Nestle Milkpak now produces a superior quality and better tasting UHT milk, with

longer shelf life.

Today, Nestle Milkpak can boast of the largest milk collection network in the country,

unmatched in size, productivity and efficiency. Milk is collected through a vast network of village

milk centers (VMCs), sub-centers and centers. At these centers, chillers have been installed to lower

5

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTmilk temperature to 4°C for preventing bacteria development during long hauls to the factories,

which are undertaken by a large fleet of specially insulated tankers.

In terms of quality, the milk collected by Nestle Milkpak is low in sodium, high in fat and

solid-non fats (SNF) and very low in Total Plate Count (TPC) which, stated simply, means the

bacteria count. This was achieved through a comprehensive strategy and sustained efforts to overhaul

the milk collection process, intensive education program for the farmers and the milk collection staff,

up gradation of milk loading and transportation system, increase in the chilling capacity and above

all, adherence to the highest acceptance standards at all milk collection points, including the

factories.

As a service to farmers, Nestle Milkpak has established an Extension Service, staffed by

qualified veterinary doctors, who assist them in vaccination and treatment of livestock, improved

breeding, good animal husbandry practices, provision of high yield fodder seed etc. By taking

professional help and guidance to their doorsteps, which they otherwise find difficult to access,

coupled with incentives and a good and prompt return for their milk, Nestle Milkpak has created a

mutually beneficial relationship with the farmers, which translates into opportunities of economic

uplift for the rural population.

To promote milk production, Nestle Milkpak is successfully promoting the use of molasses to

enrich the fodder and has arranged its distribution to farmers at cost.

6

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

PRODUCTION

As a consequence of joint venture arrangement between Nestle S.A. of Switzerland and

Milkpak Ltd. in 1988, the existing production facility of Milkpak in Sheikhupura became a part of

Nestle Milkpak.

The Milkpak Sheikhupura factory commenced operations in 1981 as a producer of UHT

milk. By 1988, it had expanded its operation and was also producing butter, cream, desi ghee - all

under the brand name of MILKPAK and juice drinks under the brand name FROST.

To meet the demands of the large food market that Pakistan offered, Nestle Milkpak

reorganized and reinforced the production of existing brands and gave shape to new production lines.

The first to come was a milk powder plant, which not only began producing NIDO in 1990 but was

also critical to the production of several milk-based products in the future. With the installation of

the roller dryer in 1990, the first such product to come was CERELAC - an internationally

recognized brand of infant cereal. This was followed by LACTOGEN 1 & 2 in 1991.

The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in bulk

packing named GLORIA. MILO and NESLAC came under production in 1994 and MILO RTD in

1995. Local packing of imported coffee under the name of NESCAFE 3 in 1 commenced the same

year. In 1996, Nestle Milkpak's first confectionery plant of POLO Mint was installed and the

production of NESTLE PURE ORANGE JUICE commenced. Packaging of coffee under the brand

name of NESCAFE CLASSIC was undertaken the same year.

In 1997 NESTLE WHEAT and two variants of POLO viz. Strawberry and Orange were

introduced. In 1998 a substantial capital investment was made to launch several products and install

two new state-of-the-art technologies. SWEET TREETS were launched in early 1998. The addition

of two flavors of POLO: Blackcurrant and Strong Mint, increased the number of POLO variants to

five. A new variant Lemony was added to the range of popular FROST fruit drink flavors and a new

1-liter packing of FROST was introduced. Flavored milks under the brand FRESH & FRUITY came

7

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTunder production on the new Tetra Filling Machine equipped with the modern "slim" format. MILO

RTD and UHT Cream were also shifted over to this new format.

A new flexible confectionery line enabled the manufacture of a wide range of high and low

boiled sweets and toffees, including TOFFO and two variants of SOOTH- ERS' Menthol Eucalyptus

and Honey Lemon. Nestle Milkpak also contracted to supply dairy mixes to McDonald's, for its

popular soft serves and milk shakes. And to top it all, the most prestigious project, NESTLE PURE

LIFE was also commissioned in December. Based on the latest water treatment and bottling

technology, this marked the entry of Nestle Milkpak in the Pakistan water market and that of Nestle

in the world water market.

The expansion of high boiled sweet line continued in 1999 with the introduction of Fruit

Drops and BUTTERSCOTCH.

The year 2000 saw the production of some exciting products. First came NESCAFE Frothed

Original, followed by its two other flavors: Mocha and French Vanilla. NESCAFE Frappe RTD was

to come next. The fruit juice range was expanded by the production of Mango and Orange- Mango

Mix. On the confectionery side, Tutti Fruiti was added under the umbrella of POLO and Wild Cherry

was added to the SOOTHERS range. The success of NESTLE PURE LIFE in PET bottles

encouraged the commissioning of 5-gallon bottles production line for home and office in June. And

the last product line of the year to be commissioned in November was that of NESTLE Plain Yogurt,

a high quality product with special Stay-Fresh Seal.

To meet the needs of safe and quality storage for the ever expanding product range and their

volumes, a National Distribution Center (NDC) was completed and became functional in June, 2000.

Spread over 6614 square meters, it has the capacity to store up to 8300 pallets (approximately 8000

tons).

8

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

HISTORICAL DEVELOPMENT

1866 Company’s foundation.

1905 Merger between Nestlé & Anglo-Swiss Condensed Milk.

1929 Merger with Peter-Cailler-Kohler Chocolates Suissee S.A.

1947 Merger with Alimentana S.A. (Maggi).

1971 Merger with Ursina-Franck (Switzerland).

1985 Acquisition of Carnation (USA).

1988 Acquisition of Buitoni-Perugina (Italy).

1988 Acquisition of Rowntree (GB).

1992 Acquisition of Perrier (France).

1995 Nestlé acquires Victor Schmidt & Sohne, Austria’s oldest confectionary, including the famous “Mozartkugeln”.

1997 Nestlé, through the Perrier Vittel Group, expands its min activities with the outright acquisition of San Pellegrino.

1998

1998

Nestlé acquires Spillers Petfoods of the UK and strengthen in the petfood business which began in 1985 with the Carnation Friskies brand & introduced Nestlé Pure Life.

Nestlé Pure Life 1.5 - liter bottle was introduced in Pakistan.

9

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT1999

2000

Divestiture of Findus brand (except in Switzerland and its parts of Nestlé’s frozen food business in Europe.

Divestiture of Hills Bros., MJB and Chase & Sanborn roast ground coffee brands (USA).

Nesle Pure Life Jumbo Service (5 Gallon) was introduced.

CURRENT STATUS

Today, Nestlé produces in over 81 countries and achieves 98% of its turnover outside Europe.

Nestlé is the world’s largest food company, which does 98% of its business. It has an annual

turnover of 70 billion Swiss francs, 522 new factories in 81 countries, 200 operating companies, 1

basic research outer and 20 technological development groups, has more than 231,000 employees

and more than 8000 products around the globe.

There are three companies co-ordinate the activities of some 200 operating companies around

the globe. Their functions and details are as follows:

The first, Nestlé, holds the financial shares in the allied companies. It also check the

profitability of these companies and to ensure the profitability of the group as whole.

The second, Nestlé, has two areas of activities that are as follows:

Research and technological development

Technical assistance

Beside this, it provides know-how in engineering, marketing, production, organization,

management and personnel training on a continuous basis.

10

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTThe third company is Nestlé World Trade Corporation that oversees the import and export of

merchandise worldwide.

NESTLE BRANDS

Quality is an essential ingredient in all the Nestlé brands and also Nestlé brands maintain

nutritional balance in a fast pace world, that is why people around the globe choose. The detail of the

Nestlé brand is as follows:

Baby foods (Nestlé Cerelac, NAN)

Breakfast cereals (Nestlé Cereals)

Dairy products (Milkpak, NIDO, Nespray, Nestlé Yogurts, Everyday)

Ice-creams (Movenpick, Dreyer’s)

Chocolate confectionary (Kit Kat, Smarties, Toffo)

Beverages (Nescafe, Milo, Nestlé juices)

Food service (Nestlé Jumbo Bottle)

Prepared foods (Maggi, Powered Soups)

11

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Bottled water ( Nestlé Pure Life, Nestlé Aquarral)

Pet care (Pro Plan, Purine, ONE, Fancy feast, Dog Chow, Cat Chow, Felix, Alpo)

Pharmaceuticals (Ophthalmic drugs, lens-care solutions & optical surgical Instruments)

OUR MISSION

“To continuously exceed our customer expectation for quality products and services”

Our goal is to offer top quality brands and innovative packaging to meet the individual needs

of consumer all over the world, whenever, wherever and however.

At Nestlé, our research makes it possible for everyone to enjoy better food for a better life.

Good Food is the primary source of Good Health throughout life. We strive to bring

consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological

needs. In addition to nutrition, health and wellness, Nestlé products bring consumers the vital

ingredients of taste and pleasure.

As consumers continue to make choices regarding foods and beverages they consume, Nestlé

helps provide selections for all individual taste and lifestyle preferences.

12

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTResearch is a key part of our heritage at Nestlé and an essential element our future. We know

there is still much to discover about health, wellness and the role of food in our lives, and we

continue to search for answers to bring consumers Good Food for Good Life.

OBJECTIVE

“Making our customers winners by constantly exceeding their expectations.”

OUR POLICIES

Business policies will continue to evolve and adapt to a changing world, our basic foundation

is unchanged. The time of origin of our company, and reflects the basic ideas of fairness, honesty and

a general concern for people.

Nestlé is committed to the following business policies in all countries, taking into account

local legislation, cultural and religious practices.

Nestlé’s business objective is to manufacture and market the company’s product in such a

way as to create value that can be sustained over the long term for shareholders, employees,

consumers, and business partners.

13

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTNestlé’s does not favor short-term profit at the expense of successful long-term business

development.

Nestlé’s recognize that its consumers have a sincere and legitimate interest in the behavior,

beliefs and actions of the company behind brands in which they place their trust, and that without its

consumers of the company would not exist.

Nestlé’s believes that, as a general rule, legislation is the most effective safeguard of

responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary

business policies is beneficial in order to ensure that the highest standards are met throughout the

organization.

Nestlé’s is conscious of the fact that the success of a corporation is a reflection of the

professionalism, conduct and the responsible attitude of its managements and employees. Therefore

recruitment of the right people and ongoing training and development are crucial.

Nestlé’s continues to maintain its commitment to follow and respect all applicable local laws

in each of its markets.

The policies formed by the Nestlé are for every employee of Nestlé around the world. The

Nestlé brands follow these above mentioned policies and does not make there own policies.

Members of Nestlé are strongly committed to the company, its development, its culture and its

policies.

Apart from professional skills and insight, the capacity and willingness to apply these policies

are the main criteria for progressing in the organization, regardless of origin, nationality, religion,

race, gender or age.

SCIENTIFIC DEPARTMENTS

Research at the Nestlé Research Center encompasses the sensory and nutritional value of

products along with consumer behavior, nutrition needs and social desires for foods and beverages.

14

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTAt the forefront of all research activities is Nestlé’s commitment to the utmost safety and quality. A

diverse selection of scientific disciplines is necessary for this global approach to nutrition research.

The scientific departments currently at NRC include:

Bio Analytical Science

Food Science

Food/Consumer Interaction

Plant Science

Nutrition and Health

Consumer   Trust

Pet Basic Research

Scientific   and Nutrition Support

CONSUMER CONFIDENCE

The Consumer Confidence department is the scientific heart of the Nestlé Quality

System. Consumer confidence and trust has been fundamental to Nestlé's success for over 135 years.

Our wide range of expertise is made available to R&D scientists, operational and technical

units and businesses. We cover five main areas:

Consumer safety that guarantees the delivery of safe products.

Product compliance that combines all aspects related to the legal compliance of Nestlé

products.

15

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Consistent quality that involves all measures for the delivery of Nestlé products with a

consistent level of quality.

Consumer preference that ensures our products demonstrate superior organoleptic and

nutritional quality.

Occupational and environmental safety that combines all aspects related to the safety of

workers and the environment.

Safety evaluation requires extensive scientific skills in the two areas of food safety: analytical

method development and science-based risk assessment. Ingredients also need to be analyzed for

authenticity and allergens. Leading edge packaging expertise also has a role to play in ensuring both

quality and safety of Nestlé food products.

Anticipation of food safety issues is guaranteed through a systematic screening of scientific

and technical literature and evaluation by our network of experts for case-adapted responses.

FOOD SCIENCE

The Food Science Department focuses on the physical, chemical and biotechnological aspects

of food raw materials, ingredients and food products. Our scientists in collaboration wit nutritionists

provide the scientific basis for innovative food concepts which deliver consumer benefits in the areas

of pleasure, health and Wellness, and food quality and safety.

For an innovative approach in the way we make food products, we work on three main

aspects of modern foods.

16

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT food processes: e.g., molecular basis of unit operations including extraction and refining of

ingredients, or biotransformations of raw materials and ingredients.

functionalities of macronutrients: e.g., structure forming properties of biopolymers, or

ingredient interactions.

delivery of functionalities in food products:  e.g., control of bioavailability of functional

molecules through specific carrier systems.

The Food Science Department assembles state-of-the-art knowledge in food ingredients, food

materials, food colloids and processes. Our research activities are targeted towards innovative and

inventive new ways to combine the classical food ingredients like proteins, carbohydrates and fats to

create new food structure concepts (e.g. foams and mousses) with specific textures and

functionalities.

Our projects are multidisciplinary and are organized in close collaboration with the other

departments of NRC including PTCs and R&D Centers as well as the external scientific world such

as universities.

BIOANALYTICAL SCIENCE

The Bioanalytical Science Department at NRC is where scientists from a range of disciplines

provide knowledge required for post genomic work. We want to understand how food molecules

affect the complex life processes... and how this knowledge can benefit mankind. 

Core disciplines span from analytical chemistry and biochemistry to (bio)mathematics,

bioinformatics and clinical studies. We focus on developing advanced analytical tools and

methodologies to support Nestlé research and, in particular, the Nutrition and Health program.

17

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTFood is a complex mixture of molecules that play different roles in the body, from

maintenance to defense and protection. Understanding the fundamental biological process is key to

deciphering the contribution of genetic variation among individuals to health and wellness compared

to the effects of the environment and lifestyle.

The biological process is a complex interplay of relationships between protein sequences,

structure dynamics and molecular recognition. This process can be studied at several levels of

bimolecular organization, which include genetic, and gene expression (genomics and

transcriptomics), protein function and signaling (proteomics) and metabolite control and regulation

(metabonomics). Bioinformatics and mathematic modeling are additionally needed to unify all of the

“omics” science areas.

We aim to be at the forefront of Bioanalytical developments and implement them to further

the science of nutrition and health.

INNOVATIONS AND PUBLICATIONS

Achieving health and wellness through foods is a challenging adventure. It extends the

boundaries of consumer expectations and satisfaction beyond the classical sensory experience.

Today’s discoveries provide the knowledge for tomorrow’s innovations.

Much groundbreaking scientific work has emerged from the Nestlé Research Center in the

form of significant product innovations and recognized scientific publications.

FOOD/CONSUMER INTERACTION 18

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTIn the context of health and wellness, we not only need to understand the physiology of

health but also to know and understand the consumer's relationship with food. What is it about a food

that makes the consumer like and chooses it?

We study in detail aspects of pleasure derived from food before, during and after consuming

it. These include the pleasure of anticipation, as well as sight, texture, taste and aroma. We also

investigate the feeling of satisfaction. In one sense, satiety is the reward derived from consuming a

particular food. But it is also strongly linked to signals that tell you to stop eating and feel happy.

Physicists and chemists help us to understand how to deliver aroma, taste, and texture. But

beyond biology, psychology or sensory behavior, ethnic culture is also a key to understanding why a

given consumer prefers certain foods over others.

The Department is truly multidisciplinary. With expertise ranging from chemistry and

biology to sensory and social sciences, we are a natural bridge between Food Science and Nutrition

and Health.

SCIENTIFIC AND NUTRITION SUPPORT

The Nutrition and Scientific Support Department (SNS) ensures that research findings and

the latest news on food, nutrition, health and wellness is disseminated across the entire Nestlé R&D

community and businesses. In addition, we support R&D innovation by providing the tools, training

and knowledge to assess and communicate the nutritional benefits of Nestlé products.

The department is composed of three interlinked groups: the first group provides

Competitive and Scientific Information and Intelligence to our scientist, technologists, and to the

management. The second group, Nutritional Assessment and Training, provides support, tools and 19

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTtraining to improve the nutritional profile of our products and to increase the nutrition knowledge of

Nestlé employees.  The group collaborates with a wide network of nutritionists from around the

world in our PTCs, R&D centers and business markets. The third group, Functional Ingredients,

focuses on traditional and functional ingredients. This group documents the strength of scientific

efficacy evidence, supports the compilation of dossiers for regulatory approval, and proposes new

nutrition concepts.

The core of nutrition, health and wellness knowledge within the Nestlé R&D community, we

supply information to our colleagues to allow efficient and timely responses to consumer health and

wellness demands.

ORGANIZATION STRUCTURE

Nestle Pakistan Limited - Company Profile Snapshot

Company

Profile:

Nestle Pakistan Limited

Ticker: NESTLE

20

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

Exchanges: KAR

2007 Sales: 32,031,000,000

Major Industry: Food & Beverages

Sub Industry: Diversified Food

Country: PAKISTAN

Employees: 2174

BRANDS IN PAKISTAN

DAIRY PRODUCTS

NESTLE MILKPAK UHT MILK

Launched in 1981, it has become synonymous with quality milk. Backed by a very strong

brand name, aggressive marketing and distribution plans, consistent quality and availability through

out the year, MILKPAK UHT has been extremely successful. In September 1999, MILKPAK UHT

milk was launched as NESTLE MILKPAK UHT MILK. NESTLE MILKPAK UHT MILK is

available in three pack sizes of 1000, 500 and 250 ml.

MILKPAK BUTTER

A continuous butter-making machine was commissioned at Kabirwala factory in the year

2000 to produce high quality cultured butter. This new butter was an improvement upon the earlier

21

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTproduct and carries Nestle branding that endorses its superior quality. It has an excellent taste and

aroma and is easy to spread.

The new NESTLE BUTTER is available in two pack sizes of 200g and 100g in new

attractive packaging.

NESTLE PLAIN YOGURT

Launched in November 2000 in Lahore, NESTLE Plain Yogurt is the latest addition to Nestle

Milkpak's dairy family. Its unique 'Stay Fresh seal and a 21-day shelf life gives the brand a

formidable competitive advantage. The brand provides valuable access to future product launches in

the chilled product category through a dedicated chilled distribution.

In a very short time the brand has gained a substantial market share. Through future

expansion into markets other than Lahore and a strong marketing and sales support, NESTLE Plain

Yogurt will undoubtedly grow into a strong brand and, in time, will achieve the status of market

leader.

MILKPAK UHT CREAM

MILKPAK UHT CREAM was introduced under the MILKPAK brand in 1986. It is available

in 200-ml pack size in an attractive slim pack. The consumer trust in the brand name and the product

has ensured its dominant share in the cream category.

MILKPAK CREAM was also introduced in an economical 1000ml pack size in the year

2000. This SKU has been developed for Food Services to cover institutions using large quantities of

fresh cream.

MILKPAK DESl GHEE

22

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTMILKPAK DESI GHEE was introduced in 1986 in tin packaging. The packaging was later

changed to Tetra Pak. However, in line with the current market trend, MILKPAK DESI GHEE was

relaunched in 1Kg tin packaging in the year2000. The product was also introduced in 16kg tin

packing to tap the huge potential of loose desi ghee.

NESTLE EVERYDAY

To target the massive potential offered by the tea-whitening segment, NESTLE EVERYDAY

tea whitener was launched in 1992. Supported by aggressive marketing using multi-media activities,

focused distribution with sampling drives and excellent consumer acceptance, the brand has shown

strong growth and holds good promise for the future.

NESTLE NIDO

NESTLE NIDO has been present in the Pakistan market since early 70's and on account of

the consumer confidence in its quality it has become a pillar of Nestle's success. Local production

commenced in1990 and within a short time the brand achieved market leader status in the full cream

milk powder category. Made from very superior quality milk and with the addition of vitamins A and

D, NESTLE NIDO is the best quality milk for growing children.

The brand has now launched a low unit priced SKU that offers half a liter of quality milk at a

very affordable price. NESTLE NIDO is well on its way to becoming a mega brand.

CHOCOLATE DRINKS23

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

MILO POWDER

To provide convenience to consumers, NESTLE MILO was launched in its new 130gm. SKU

in an attractive airtight jar in February2000. This was done with a view to bring our packaging in line

with the industry practice of making milk fortifiers and modifiers available in jars and tins and to

reverse the trend of consumer preference for imported MILO or similar products over local MILO.

Consumer response to the new initiative has been very positive.

MILO RTD

To cater for consumer convenience, MILO RTD (ready to drink) was launched in 1995 and is

now available in an attractive 180ml slim pack. Popular with all age groups, specially among the

growing segment of nutrition conscious consumers, it is an excellent substitute for cold drinks.

COFFEE

NESCAFE CLASSIC

NESCAFE, Nestlé’s international flagship brand, is locally repacked and marketed in 2gm.

and25gm. Sachet, 75gm. bottles and 500gm. Soft packs. The brand enjoys a special position in the

country's coffee consuming segment.

NESCAFE FROTHE

NESCAFE Frothe (Original), a premix in 18gm. single serve sachet, was launched in January

2000. The product profile was developed through consumer research and was accordingly offered as

a sweet, creamy and foamy coffee. Encouraged by extremely good consumer response to this

cappuccino style coffee, French Vanilla and Mocha flavors were introduced in November to offer a

wider choice and to enhance the young and fashionable image of this mixes category.

NESCAFE FRAPPE

24

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTTo promote summer consumption of coffee and to change consumer perception that coffee is

only a winter beverage, NESCAFE Frappe was launched in June 3000. This iced, creamy, ready-to-

drink coffee in180ml slim pack was positioned to appeal to the youth and gain a strong share from

other summer beverages. The launch was extensively supported by promotional programs in major

towns and the product is fast gaining in popularity.

FRUIT DRINKS

FROST

A well-known brand, FROST was introduced in 1986 and has the largest share of the

countrywide market. Positioned as a cold drink and alternate to cola drinks, its strength lies in the

convenience attached to its usage.

NESTLE JUICES

Encouraged by the consumer response to NESTLE ORANGE JUICE that was launched in

1996, the category of NESTLE juices was expanded with the introduction of Mango-Orange and

Mango flavors in the year 2000. This has further strengthened the position of Nestle as leader in the

value added/premium drinks market. Consumer to gain further.

DIETETIC & INFANT PRODUCTS

LACTOGEN

LACTOGEN 1 and LACTOGEN 2 are infant and follow-up formulae launched in 1991 and

are available in two sizes. The brands provide both affordability and quality.

CERELAC

Launched in 1989, CERELAC is the dominant player in the growing infant cereal market.

Available in 5 flavors, the brand provides balanced nutrition to infants from 4 months onwards.

NESTLE RICE25

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTAn affordable starter weaning cereal, NESTLE RICE offers the flexibility of preparation with

a variety of meals. Gluten free, the brand is available in 125 gm. packs and is specially suited to the

needs of infants from 4 months onwards. It was launched in 1994.

NESTLE WHEAT

NESTLE WHEAT is a wheat-based infant cereal without milk, for infants of 4 months and

above. It was launched in 1997 and is available in packs of 125 and 250 gm.

NESLAC

NESLAC is a growing-up milk, formulated specially for 1 to 4 year olds. It contains just the

right balance of proteins, calcium, iron, vitamins and essential minerals in order to cater to the

nutritional needs of a growing child during this special age. The product was launched in 1994.

CULINARY PRODUCTS

MAGGI 2-MINUTE NOODLES

Fast to cook, good to eat - MAGGI 2-MINUTE NOODLES were launched with local

production in 1992 and in doing so Nestle pioneered the category of instant noodles in Pakistan.

MAGGI 2-MINUTE NOODLES have special appeal for children, are fun to eat and offer a range of

interesting flavors, namely: Chicken, Masala, Chilli and Chatkhara. Affordably priced and backed by

focused marketing activities, MAGGI NOODLES have shown good progress in 2000.

MAGGI COLD SAUCES

Nestle entered the Cold Sauces' category in 1999 with the launch of MAGGI Ketchup,

MAGGI Mirch Maza and MAGGI Khatti Meethi - the first Imli sauce in Pakistan. The innovative

taste of Khatti Meethi together with the more traditional tastes of Ketchup and Mirch Maza, were

received well by the consumers.

26

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

BRANCHES IN PAKISTAN

Nestlé Pakistan has its branches in the following major cities of Pakistan:

Lahore Islamabad

Faisalabad

Sheikhupura (factory)

Karachi

Nestlé is a customer and profit oriented organization rather than system and strategy oriented.

The mechanics of generating profit are low-cost production and high-price sales.

Nestlé has different division. There are four departments in the Nestlé confectionary that are

as follows:

CCST Department

Marketing Department

Sales Department

Distributor

Now, let us discuss each of the departments separately.

CCST DEPARTMENT

The CCST department is a supporting department for both Sales and Marketing departments.

It provides a linkage to both departments by connecting them in case of any demand from other

department.

MARKETING DEPARTMENT

The Marketing Department is responsible for all sort of activities including the promotion,

advertising and tools used for generating demand.

27

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTThe Marketing department is also responsible for arranging stalls and functions for the

promotional and official reasons respectively. These stalls are conducted in different public places so

that more of the people become aware of the importance of products that ensure quality. These stall

activities remain active for around 4-5 days. Thus, in a month 4-5 such stalls are managed.

After a stall activity finishes, the person who conducted the stall activity has to report to their

seniors about the response they received from the public and the number of new customers they have

been able to attract during their stall activity.

SALES DEPARTMENT

The Sales Department is responsible for carrying out the sales of Nestlé confectionary

covering the whole of Lahore. To conduct the sales efficiently and effectively, there are some

territories that have been assigned some area of Lahore. The area managers administer these

territories.

Monthly, the Area Sales Managers are assigned with the targets by the upper management.

This helps in creating competition among the territories

Like some territories covers these areas respectively.

Interior Lahore, upper Mall

Gulberg, Cantt, Cavalary

Defense

Model Town, Township, Garden Town, Johar Town, Rehmanpura and Thokar Niaz

baig

These four territories are further covered with a total of 20 routes, each covering a specified

area of Lahore on daily basis.

Everyday, the Nestlé delivery van drop confectionary products. There are three people who go for sales. They are:

28

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Driver DSR

Loader

For carrying out the transaction easily, the DSR are provided with a handbook. The handbook

keeps records of the data of the retailers. All this data is stored in the system thus, keeping the system

updated.

At the start of the month, the target for the sale of the confectionary is set and all the

distributions have to achieve that target by the end of the month that helps in increasing the

productivity. The sales target varies with the season. For example, in winters, the sales of

Confectionary products are more as it is in summers. Also, the monsoon season affects the sales of

the candies and chocolates.

When it is the end of the month, all the distributions submit in their report to the Sales and

Distribution Manager that contains the percentage of the target achieved including the quantity sold

by each route.

DISTRIBUTOR

For carrying out the daily working, some internally hired or external sources are acting as a

distributor for Nestlé in Lahore. The distributor has various responsibilities/duties that are as follows:

ELEET MANAGEMENT

Procurement of Vehicle. Installation of Hood on Distribution vehicles.

Paint of Hood & its maintenance.

Maintenance of vehicles in good condition.

DELIVERY TEAM 29

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Short listing of DSR’s for hiring.

Supervise DSR orientation & Training.

Daily supervision of DSR performance.

Ensure DSR’s working as per company direction.

CUSTOMER SERVICES

Delivery at customer premises on schedule day & routing time.

Ensuring delivery on special request forwarded by customer services.

Attending all delivery related complaints in time.

WAREHOUSING

Procure a warehouse as per Nestlé Standard.

Ensure all Nestlé Quality Standard (FIFO, NQS, and QSM etc).

Maintain a clean environment.

Minimize store losses.

ACCOUNTING

Maintain audited accounts of the business.

Provide in time reports to Nestlé Management.

Make claims as per company guidelines & verify data.

Ensure efficient operation.

GENERAL

Adhere & act on all policies/decisions by Nestlé Management.

30

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Close liaison with Sales Management for Target Achievement.

STYLE OF WORKING

Nestlé is profit and customer oriented organization rather than system and strategy oriented. The products are manufactured at low-cost and sales are made at high price.

All the departments of Nestlé are related to each other along with their independent working.

In order, to improve their working and their level of service they provide to their customer, weekly

and monthly meetings are held. These meetings discuss the following things:

Performance level of employees

Progress at territory level and as a whole

Sales of the organization

Where an improvement is required

The working/activities of division include the following features:

Selling through proper transportation

Area storming for creating awareness

Stall activities

Rewards offering scheme

Taking feedback from the customers

31

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Providing service for chiller maintenance and technical problems

This activities/working of the organization involve the basic principles of marketing, client service, public relation, planning, organizing, leadership and communication whose brief description are as follows:

The basic principle of Nestlé in marketing is to provide its customers with quality product at reasonable price.

For communication at national and international level there are various ways to communicate that are as follows: Universal and direct telephone lines

Fax Email

Letters

ORGANIZATION STRUCTURE

National Sales Manager

Zonal Sales Manager

Regional Sales Manager

Customer Area Managers System Support Event

32

Territory In-charge

System

Loaders

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Service Manager Executive Management

Customer

Service Officers Support Officers

Sales Associates Event Chiller

Management Technician

DSR Officers

Loaders

MAIN STRATEGY OF NESTLE CONFECTIONARY

Every organization has forms some strategy to follow. Therefore, strategies adopted by

Nestlé that have proved fruitful are as follows:

Consumer communication

Product availability and development

CONSUMER COMMUNICATION

With the help of electronic media, advertisements boards, banners, advertising on

newspapers, pamphlets, brochures, handouts and by the stall activity of marketing department; taste

of the customer is developed and awareness is brought among people about the healthy living that

can be achieved by healthy and delightful eating.

PRODUCT AVAILABILITY

From time to time activities such as area storming, discovering new places or areas are being

done. Thus, making the distribution equally available everywhere. 33

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

COMPETITORS OF NESTLE CONFECTIONARY

Every organization or we can say that every business run by any company faces competition

in a competitive market. Nestlé is a multinational company. It has competitors in a global market and

in a local market. Now lets see the competitors of one of the brands of Nestlé that is Nestlé

confectionary in a local market. The competitors that Nestlé confectionary in Pakistan are as follows:

Cadbury

IBL

Mitchell’s

Candy land

Even though there are competitors in the market but still Nestlé confectionary does not face a

very tough competition. There has been great competition faced by Nestlé confectionary as local

companies try to compete with the multinational brand.

34

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

SWOT ANALYSIS OF NESTLE CONFECTIONARY

STRENGHTS

The strengths of Nestlé confectionary products including Kit Kat, Polo & Fox are as follows:

Company’s name Nestlé” signifies the quality image high standard and quality product.

Loyalty from customers is also the major strength for the company.

Employees are also loyal due to the decentralized culture of company.

People trust on products due to the proper health and safety measures.

The strength of Nestlé confectionary is its imported chocolates and candies, which

strengthens its image.

Being a multinational company it has the capability to attract more customer than the local

companies.

35

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT Company has the ability to compete in a dynamic environment.

Company always adapts the new technology.

WEAKNESSES

The weaknesses are as follows:

There is not much margins for retailers to prefer it’s sales.

They need to improve the facilities like chillers.

The distribution cost is high as compared to the competition in the local market.

Company mostly advertises its milk products, advertisement of confectionary products is not

so better.

OPPORTUNITIES

They have an opportunity to expand or capture the market by adding its product line.

They have the opportunity to offer snacks.

They can also capture the market of home appliances.

Company can open separate stores to eliminate retailers.

Recently, they have created an opportunity for themselves by introducing chillers in the

market.

Company is trying to open stores in universities.

36

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT They can provide incentives to retailers to increase sales volume.

Company can enter in ice cream products/

THREATS

Existing companies are increasing their product lines that can prove to be a threat in the

coming years.

Company like Cadbury is giving more discounts to retailers as compared to distributors due

to which retailers prefer its products for sale.

As compared to the local competitors, our distributor cost is very high. As Nestlé

confectionary Products has to maintain and obey the Nestlé standards.

Some companies are competing on the basis of cost.

37

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

BCG MATRIX

STARS

The stars are the high relative market share and high market growth. Nestle beverages i.e.

are somewhat the stars in their business, because with the high quality and new designs which comes

every now and then makes them more popular among the customers, because customer with upper

class wants the quality and nestle offers the best quality food items.

CASH COWS The cash cows are their baby food items i.e. nestle cerelace and other baby food products.

Company has to take measures to make these products as stars.

Star

Question Marks

Cash Cows Dogs

Rel

ativ

e M

arke

t Gro

wth

L

ow

H

igh

38

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

DOGS The pharmaceutical products are nestle Dog, because it has low-share business with low

growth market especially when we talk about Pakistani market. The company has to think on what it

can do by improving the low share and growth market.

QUESTION MARKS

The question marks are the breakfast cereals. They have high market growth but low

market share. The company has to decide about which question mark they should try to build into

the stars and which one of these should be phased out.

COMPETITIVE STRATEGY “WHAT MAKES COMPETITIVE”

The hallmark of the nestle′ is the quality of the products which the company offers.

COMPETITIVE EDGE OF NESTLE

The companies all over the world get some competitive edge based on some features

which other companies don’t have. For example, as the Dell has the competitive edge over other

computer manufacturer companies, because they use Built-to-order Strategy while no other company

in computer industry use this strategy. Similarly in Pakistan nestle has their Competitive edge based

on these Strategies:

Product Differentiation

Customer Oriented

39

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

PRODUCT DIFFERENTIATION STRATEGY

Nestle is using the product differentiation strategy by providing the superior quality

products. Their main focus is to keep the customers loyal. They bought shelve space in different

departmental stores to attract the customers. They tried to reach each group of people in which they

have succeeded.

CUSTOMER ORIENTED

Customer satisfaction is the focal point for the company. They provide hygienic products

to their customers. Products are also verified by health and safety measures and international quality

standards.

MARKETING MIX

Marketing Mix is defined as a set of controllable tactical marketing tools that firm blends to

produce the response it wants in the target market. The marketing mix consists of every thing the

firm can do to influence the demand for its products. The many possibilities can be collected into

four groups of variables known as the four P's that are as follows:

1. Product

2. Price

3. Place

4. Promotion

40

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

1-PRODUCT

Product stands for goods and services that the company offers to target market.

Nestlé kit Kat is in four sizes including K.K Chunky, while Polo is in three sizes. The shape

and the color of the Kit Kat and Polo are quite attractive for the customers. The labeling, packaging

of the Kit Kat and Polo includes the Nestlé brand and logo. The packaging includes an expiry date

and time along with a manufacture date. Second part of labeling includes the quantity of product in

grams along with ingredients and contents of chocolates and candies.

2- PRICE

The amount of money charged for a product or service, or sums of the values that consumers

exchange for the benefits of having or using the product or services.

The price of Nestlé Kit Kat and Polo varies increases with the increase in its size.

3- PLACING

Placing stands for company's activities that make the product available to the target consumer.

Nestlé' distribution is using the direct distribution channel to supply confectionary products weekly to the retailers.

4- PROMOTION

Producing a quality product, pricing it attractively and making it available for the target

consumer is not the only problem companies need to solve. Modern era is the era of communication

with customer, assuring customer satisfaction, demands for personal and non-personal

communication with the target customer to build a relationship with them. In an area-storming

activity, giving out products free, gift hampers, attracts new customers; kites depending on the

season (for existing and potential customers) are given. The basic purpose is to explore the area that

is being unexposed and to bring awareness in the people.

41

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

TRAINING PROGRAM

The training programs are conducted time to time according to the need of the organization.

Thus, there are different training programs held for the employees. The training programs are

conducted every month whereas the training programs for the employees are conducted from time to

time according to the standard of the company. They are also providing technical training to their

employees. They made cross functional teams for training and the development of their employees.

TRAINING PROGRAM FOR DSR

An organization conducts a training program to provide better service to its customer. Thus,

for this reason Nestlé conducts training program every month to train its DSR in various areas

because DSR are the delivery person and it is they who through their behavior and appearance

develop the image of their company.

The training program for the DSR emphasize on the following features:

How to behave when they are dealing with the customers

What is expected from them

What are there duties

How to handle the situation if any problem arises.

How to dress themselves

How to handle the retailer

Their personal attire

TRAINING PROGRAMS FOR THE EMPLOYEES

42

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTThe training program for the employees involves different programs, which gives them

chances to improve themselves where they lack and to handle the situation more confidently, and

efficiently.

According to the need, the employees are given a chance to visit the Institute of Sales &

Marketing in Lahore for one day training. These training programs are offered to the employees once

in a year to keep up the new building standards of the organization and to make them competitive.

CAREER DEVELOPMENT

Nestlé does give their employees a chance to discuss their career development for future

accomplishments. They send their efficient workers and employees abroad for the improvement in

their career. They also conduct workshops and seminars for this purpose.

When employees are given specific training program, they tend to learn new things and

therefore show improvement in their performance. This betterment in their performance enable them

attain promotion for themselves which gives them more experience and motivates them to do well in

future and develops their career as they go along.

COMPENSATION SYSTEM

Nestle has established a separate compensation department for its employees. They offer

incentive pay and special bonuses to employees. They have developed the performance appraisal

system. They also provide disability benefits to their employees. Company has hired human resource

professionals to develop a competitive compensation system.

43

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

WHAT I HAVE LEARNED AT INTERNSHIP

PERSONAL LEARNINGPersonal learning is a moral and ethical obligation set by a person to move in a mellow way to excel

in present and future.

During the internship I realized following duties.

Cohesiveness

Ever Ready For Challenges

Broad vision

Learning From Cradle To Grave

Always Create Opportunities

Open Communication With The Boss

Appearance

COHESIVENESSA team player can achieve more than an individual. Good coordination and cooperation with

peers and other staff members can impulse a person to perform better in difficult situations. During

my internship I noticed that the degree of cohesiveness among the nestle employees is high, that is

why nestle is achieving its target quite efficiently.

EVER READY FOR CHALLENGES

44

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTIf a person can handle problems and challenge adequately, he can grow especially in

marketing field where every thing is presently dynamic.

BROAD VISION“THINK BIG”

Think positively to avoid any kind of discrepancy and hurdle in your task. Positive thinking

and broad vision helps you to achieve some thing different and new.

LEARNING FORM CRADLE TO GRAVELatest researches and journals can be very helpful in order to generate new ideas.

At nestle, Sales department offers many new courses to the employees to upgrade their knowledge.

ALWAYS CREATE OPPORTUNITIES

“Don’t wait for opportunities always create opportunities”

“Time & Tide Waite for None”

If you are able to create opportunities, success is yours. Now the question is how?

The answer is very simple, by generating new and useful ideas for the organization.

OPEN COMMUNICATION WITH YOUR BOSSTo avoid any kind of misunderstanding with your boss, communicate freely with him.

During my internship I analyzed that;

“People don’t leave the organizations they leave their bosses”

So be friendly with your staff and boss and communicate freely to avoid organizational

switching.

APPEARANCE“Treat your self as a product”

45

NESTLÉ CONFECTIONARY — INTERNSHIP REPORTAttractive appearance can be very useful to impress others. A professional should be dressed

up properly to influence others.

RECOMMENDATION

There are few recommendations that are recommended if the project is to be conducted again in future.

Employees should be trained according to the changing standards of the organization.

Company should conduct survey from time to time to according to which changes can be

introduced in the organization to stay updated in the market.

They should introduce creativity into the work, so that the employees can do their work

active mindedly.

Employees should be given compensation in order to keep them loyal.

Employees should be more involved in decision making to become more differentiated.

Company should provide incentives to shop keepers.

46

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

REFERENCES

I have collected all the data from the following sources,

www.nestle.com

By communicating with the employees

47

NESTLÉ CONFECTIONARY — INTERNSHIP REPORT

48