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GLOBAL FINANCE
225,000 people in 479 factories scattered across 81 countries, with
less than 2% of total sales being generated in Switzerland. Being a
Swiss company, however, insulates Nestl´
e from some of the short-
term pressures from financial markets because quarterly reports are
not required, the company is not affected by the four monthly share-
price jitters that can disturb its major competitors in the US, and
can concentrate on longer-term growth. That approach has paid off,
producing an average annual increase in shareholder return of 20%
over the last 10 years. The company's shares are listed on the stock
exchanges of Zurich, London, Paris, and Frankfurt, with ADRs offered
in the US by Morgan Guaranty.
Nestl´
e products are available in nearly every country around the
world. It is the brand manager's dream, with more than 130 main
brands in food and personal care products. 70% of the company's sales
come from six worldwide corporate brands, Nestl´
e, Nescaf´
e, Nestea,
Maggi, Buitoni, and Friskies. For decades it has steadily acquired more
well-known brands, including Findus frozen foods, Vittel mineral water,
Crosse & Blackwell preserves and Rowntree confectionery. Its total
sales were over $49bn in 2000, with profits of $3.7bn. About a third of
sales are generated in the Americas and another third in Europe. The
remainder is split roughly equally between food sales in the rest of the
world and the global sales of pharmaceuticals and bottled water, which
is managed as a separate division.
The company places great emphasis on expanding its markets
geographically. ``One of our major challenges and opportunities is
to understand local consumer habits in the local environment. A classic
reason for failure is to believe that a sound concept and a good product
in one part of the world is enough in itself to ensure success in
another part of the world. Understanding the local environment would
probably imply adjustments to a product and to a concept . . . There
are some experiences that show the contrary, but in the food area,
local understanding is fundamental,'' says Claudio Bartolini, senior vice
president of Nestl´
e's Dairy Strategic Business Unit.
Nestl´
e has attracted criticism for its activities in LDCs over issues such
as environmental practices, employment conditions, and its marketing
methods. The best known controversy is over the company's original
product, milk for babies. For 20 years pressure groups have promoted
