Nestlé SA: Nutrition, Health and Wellness Strategy

The vision of Nestlé is to be the leading nutrition, health and wellness company in the world. When you
have a good vision you don’t change it dramatically each year.
—Paul Bulcke, CEO
In 1997 Nestlé committed to a strategic vision of becoming the leading nutrition, health and wellness
(NHW) company in the world. Over the next 13 years, the NHW strategy guided strategic decisions and
choices at Nestlé including merger and acquisition choices, strategies for improving products, and
packaging innovations that helped Nestlé built credibility with the consumer in NHW, raised profit
margins, continued strong growth and differentiated the firm.

Birth of a Strategy
CEO of that time John Brebeck was convinced that Nestlé needed a long-term strategic vision to move
the company toward growth at higher margins. To lead toward the vision Brabeck created the nutrition
strategic business division, tasked with developing actionable steps to
move Nestlé toward becoming a NHW business.

Milestone
To achieve the vision Nestle made so many acquisitions that decisions played vital role in the
development. In May 2006, Nestlé acquired health cereal and snack manufacturer Uncle Toby’s for $670
million. Then, on June 19, 2006, Nestlé announced that it would pay $600 million for Jenny Craig, a U.S.
brand that sold prepared diet foods and operated weight-loss centers throughout the United States. In
December 2006, Nestlé acquired the Medical Nutrition arm of Novartis for $2.5 billion, raising Nestlé’s
share of the medical nutrition market from 7% to 25%, thus becoming the second-largest firm in the
category globally. In April 2007, Nestlé also acquired Gerber baby foods from Novartis. By the end of
2007, Nestlé Nutrition had grown to $11 billion in annualized sales. The firm was the world leader (by
sales) in infant nutrition, infant formula and baby food, and science-based performance nutrition.

Innovation
60/40+
In its early years, the nutrition strategic business division brought together executives from different
product teams to discuss nutrition initiatives and brainstorm ways to impact change at scale. One result
was 60/40+, a metric developed in 2003 through which Nestlé objectively measured and then improved
the nutrition of its products. The metric built on Nestlé’s existing 60/40 standard, which required that
consumers prefer the Nestlé product to the top competitor’s products at least 60% of the time in a blind
taste test.

Nutritional Compass
In 2005, Nestlé began rolling out a cross-company packaging innovation, the Nestlé Nutritional
Compass. The compass was an on-pack information panel that explained nutritional information to
consumers in an easy-to-read format. It had four elements: A standardized nutrient table, Good to
know, Good to remember and Good to talk.

Conclusion
The company’s vision was to become the global leader in NWH industry, which can be attainable in
a sustainable manner. It includes investing in building the existing business so that the customers
would perceive the food as healthy. Therefore, it affected in terms of introducing more products that
increased the health concerns for the consumers and it required building large network of research
and development. Along with this, it required huge investment in order to manufacture the new
products which may go to waste because of not achieving the targeted sales.
On the other hand, it would require procuring more health business or new businesses in a similar
class as well as acquiring more health businesses that are doing well, as it would result in getting
more clients for the current business too.