Market business strategy of NestlĂŠ in Russia
Consumers choose us!
Introduction
Dear colleagues! consumers are choosing our products, Here in Russia in a fast-developing market, we must think about our future and developing our organization, our team, talents and processes. So we and how we build the company that have two focuses. And let me give will be successful in 2020–2030. an example of “telling the time and Our vision is to be the leading Nutrition Health and Wellness company building the clock”. When serving our consumers we “tell the time”. And in Russia. There are two key directions at the same time we have to build in our development: “a better clock” — our organization. • firstly, to make the consumers With all this complexity I’m sure choose our products more and more. that it is very important to share with They will do this because they know you the company’s vision and priorities. that our products are the tastiest and This brochure is intended for everyone healthier choice and care for them and and I encourage you all to read it their families. Doing this means that because it explains our shared future we should more than double our sales that we will achieve together. You in the next 10 years. It will come from will better understand the strategic an increase in our market share in the directions we are taking, why we are segments we are already in through doing certain things and also how we great innovation and renovation are going to cascade the company’s and entry to new segments and objectives. In the end we will all see market places, bringing products and innovations from all of the Nestle world how each of us, doing the best we can, will make sure that our team, our into Russia; company wins the heart of the Russian • secondly, to further develop our consumer. company and continuously improve everything we do. We will do this by developing the talents of our people. That is why when we are talking about the future of our company, we need to talk about two things — Stuart Irvine, developing our market share so the Market Head of Nestlé Russia & Eurasia
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Market overview
“
It’s clear for Nestlé that to win in the world, it has to win in the world’s largest country. We need to win in Russia.” Stuart Irvine, Market Head of Nestlé Russia & Eurasia
Russia outlook:
• occupies 17% of European population; • demonstrates 3–4% p.a. GDP growth; • demonstrates further growth of the middle class from current 49%; • is forecasted to be the largest consumer market in Europe by 2025.
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The Russian market is one of the key markets for Nestlé in Europe. The middle class in Russia is growing fast, and as a result the market growth will be higher than in Western Europe. But we have to deal with the following trends: • firstly, before 2008 Russia was a fast-growing market and the consumers’ disposable income was growing very fast. Now Russia is still growing, but it is much more normal business. The Russian consumers are now very articulate in understanding brands, quality and value. They want to get value for money and they shop in the channels where they get that value. • secondly, customers’ structure
has been changing from the traditional trade which was very diffused to a strong concentration in the organized trade. As organized trade gets bigger, customers require specialized programs, and we have to become more flexible in cooperation with them. • Thirdly, dramatic change in prices on commodities causes more pressure on the company to become more and more efficient to give the consumers the quality they want and the price they are prepared to pay. The winners will be the companies that can do this best — not the companies that provide the cheapest prices, but those who provide the right value at the right price.
Nestlé position
Our mission
Overall strategy
Consumers choose us!
To ensure growth by reinvesting grabs and efficiency savings into increasing competition for market share growth. Market share is the fundamental KPI of the company’s business as it reflects the number of consumers that choose to buy our products. In the long-term perspective, it is the most important measure: the more consumers choose to buy the company’s products, the more products we make, the more assets of the company we utilize, the more profit we make and the more money we can reinvest into creation of the next series of products and improve the price we currently have. Meanwhile if the competitors lose market share they make less products, they are less efficient and have less money to invest into consumers. So market share is the key KPI for the whole company and is one that all employees should be focused on all the time.
Our vision We are to be the leading Nutrition, Health and Wellness company in Russia driven by our belief in «Good Food, Good Life».
Our objective To deliver the Nestlé Model sustainably by growing top, bottom and market share lines. The Nestlé Model is part of our way of working — we have to deliver top and bottom line growth. By year 2020 our company should double the business but do this in a responsible way. We can’t just double the sales, we have to make sure that we also deliver profitability, because it is the fuel that enables us to continue growth.
“
When we ask the Russian consumer he or she would say: “I trust Nestlé that offers the tastiest and healthier products which help me to care for myself and my family”. This is what we mean by “Good Food, Good Life”.” Stuart Irvine, Market Head of Nestlé Russia & Eurasia
Nestlé in Russia:
• contributes 8% of Zone Europe sales; • has opportunity for growth in the current categories due to low penetration and frequency.
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Key priorities
To achieve the company’s vision and goals we have identified 4 key priorities. Under each of the priorities different drivers were determined that can help us to bring these priorities to life. Underneath each of them there is a set of activities that helps us to drive these areas. We track these actions in terms of whether we are executing them correctly and if they are giving us the intended results.
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Our commitment is to stay connected to the consumers, to understand what the consumers want and why they choose our products for their families.” Stuart Irvine, Market Head of Nestlé Russia & Eurasia
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Make our consumers want to choose our products more and more
It all starts with what is going to convince the consumers to choose our products. Our commitment is to stay connected to the consumers to understand what they want and why they choose exactly these products for their families. There are hundreds of different things that makes them do so, and that is the work of everyone in the company: it is the quality of the ingredients, the quality of the processes in the factories, the speed of delivery and freshness of the products, pricing, packaging, communication, recommendations, the fact that it is the very first product they see when walking into the store, and many other things. Among other, the most influencing factors are: • tastiest and healthier products; • engaging communication; • innovation and renovation; • freshness; • availability.
OUR CONSUMERS OUR PEOPLE
NCE COMPLIANCE
Drive a high
performing organization and be a great place to work
We have to be very aligned with the fundamental principles of Nestlé. And at the same time — be willing to change and challenge the way we do things and improve it all the time. That is why the important part of our strategy is devoted to people. It includes: • care for people and focus on safe behavior; • career development; • reward and recognition of employees through recognition program implementation; • capability building through leadership development; • working on winning common values and behaviors.
Our people People from diverse backgrounds are our most important asset and the source of our competitive advantage. It is our talents who help us to develop our company. We operate in rapidly changing environment and should all enjoy achieving success together. To do this we should work on winning common values and behaviors.
Gain share by helping
Drive Virtuous Circle in
The strategic customers that we have identified are big now or will be big in future and are strategically aligned to the way we want to reach the consumer. Being able to have good partnership relations and collaboration with them is vitally important. We need to make sure that all the activities we engage in bringing our brands to consumers also help our customers to bring these brands to consumers. At the same time, as the trade landscape is changing rapidly, we should always search out for new opportunities to reach our consumers. The development of the digital or “e” world will be vital in the future. Our main focus is on: elivering of the category growth • d deployment; • gaining growth in prioritized channel; • e nsuring focus on strategic customers and provide an excellent service level; • developing new channels.
We have more and more pressure to become more and more efficient to give the consumers the quality they want and price they are prepared to pay. We should find sources of efficiency, use the saved resources for investment in innovations in key brands, gain market share and achieve profitable growth. We can do that through: • managing our portfolio by focusing on value creation; • managing value chain to eliminate and reduce all kinds of waste; • optimizing costs; • ensuring operational efficiencies & process optimization through Goal alignment and LEAN.
strategic customers in prioritized channel to grow
Russian salessales Russian channels development channels development
order to deliver the Nestlé Model in a consistent and reliable way
1 Source of efficiencies 2Focused
4Delivering profitable growth
3 Drive market share gains
2005
2006
2007
Traditional trade
2008
2009
2010
Modern trade
2011
investments on key brands and I&R
The Virtuous Circle has four building blocks that we need to drive: • efficiencies — the fuel for the growth, the starting point of the Virtuous Circle; • focused investments behind growth platforms and key innovations; • market share gains driving sustainable top line; • profitable growth achievements thanks to scale leverage
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Our foundations
“
If we didn’t have NCE here in Russia we would have to invent something like this.” Stuart Irvine, Market Head of Nestlé Russia & Eurasia
Compliance
Compliance is the foundation of everything we do. In order to be fully trusted by all our stakeholders, we need to excel in compliance. Internal compliance means being in accordance with established policies, standards, guidelines, specifications and best practices, while external compliance means being in conformity with relevant local and international standards.
ZERO Waste
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NCE
Nestlé is one of the most complicated business in the world, and NCE give us a way of organizing ourselves and making the business a little bit better every day. Applying NCE practices at all levels of our organization develops a common language and common mission — delighting the consumers, delivering competitive advantage and excelling in compliance. By focusing on what the consumers really value and eliminating what they don’t, we will release time for more creative activities that will further enhance value for the consumer.
ONE Team
100% Engagement
Operational master plan
OMP and A3
Operational master plan (OMP) and A3 are a part of the new way of working in terms of deploying and cascading objectives and action plans for the company. This is a way of aligning everybody around one set of goals and objectives over a three year horizon. OMP is cascaded throughout the organization and each business in its turn develops its own operational master plan that is related to the corporate one and translates function’s strategies and priorities into activities. It is an interactive process — not only goals and objectives are cascaded down the organization but also the company expects the teams’ input into the corporate goals.
LEADERSHIP TEAM LEVEL
A3 provides a high level summary of OMP. It is a key document for Nestlé to make everybody aware about the company’s or department’s vision, targets and priorities. It is a critical communication tool across all levels and communicates OMP in a visual and concise way which everyone can understand.
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I encourage all teams to look at OMP up and down the business and work together on their OMPs to see the coherence of everything we are doing together.” Stuart Irvine, Market Head of Nestlé Russia & Eurasia
OPEPATION MASTER PLAN AND A3
A3 is used as communication tool at all levels
DEPARTMENT LEVEL
DEPARTMENT A OMP
DEPARTMENT B OMP
DEPARTMENT C OMP
Strategic inputs are translated into OMP activities at department/team levels and cascaded to all operational levels
TEAM LEVEL TEAM A OMP
TEAM B OMP
TEAM C OMP
TEAM D OMP
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Notes
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