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Nesvita

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NESTLÉ NESVITA Cereal Milk Drink
By Ma. Cristina Villanueva

INTRODUCTION
In 1994, NESTLÉ launched the first of its kind instant cereal beverage under the brand NESVITA in the Philippines. This was the first product launched by NESTLÉ under the NESVITA brand name.
NESTLÉ NESVITA Cereal Milk Drink truly was a revolutionary product back then since it was harping towards the benefits of convenience and healthy nutrition.
Since 1994 until the late 90’s, NESTLÉ NESVITA Cereal Milk Drink was the only instant cereal beverage in the market. The NESVITA brand name has been synonymous already with instant cereal beverage similar to that of Coca-Cola (or Coke) to soft drinks. However in recent years, other manufacturers started to challenge NESVITA Cereal Milk Drink, low-priced brands targeted to different age groups as well as different Socio Economic Class (SEC) of the market.
One of the biggest threats of the product, PT Kakao’s Energen, has been gaining a lot of momentum in terms of market share due to its positioning as well as pricing. The product was initially distributed to sari-sari stores, market stalls as well as small groceries in Visayas and Mindanao but is now slowly being introduced to the supermarkets, groceries, conveniences stores as well, channels wherein NESVITA Cereal Milk Drink is currently present1.
NESTLÉ recognized the emerging threat of Energen to its NESVITA business but also realized that
NESVITA may not be the right brand to challenge Energen due to its positioning and pricing strategy.
This was the reason why in March 2008, NESTLÉ launched a low-priced cereal beverage under the mega brand BEAR BRAND called Busog Lusog Cereal Drink which is targeted to lower SEC’s as well as the whole family.
The entry of BEAR BRAND Busog Lusog Cereal Drink proved to be a great strategy in challenging
Energen in the bottom of the pyramid consumers since it was distributed in channels where Energen is.
The primarily role of the brand is to shift current Energen users to BEAR BRAND Busog Lusog and attract new users into the category. In the first 6 months of the launch of BEAR BRAND, it has been able to grab share from Energen but it has also cannibalized a portion of NESVITA Cereal Milk Drink’s market share.
Since NESVITA Cereal Milk Drink is the biggest contributor and profit driver for the total NESVITA business, the challenge that the NESTLÉ Management posed to the NESVITA team is how it can grow the business further without changing its positioning as a “premium” cereal beverage brand targeted mainly to Filipino adults who are into a healthy lifestyle.
1

* Energen has the same distributor as Kopiko (which is an emerging player in the pure soluble coffee category)

THE COMPANY
NESTLÉ Worldwide
NESTLÉ was founded in 1866 by Henri NESTLÉ, a Swiss pharmacist who developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. NESTLÉ's new formula saved the child's life. People quickly recognized the value of this new product, and soon after, it was being sold in much of Europe.
Today, NESTLÉ is the world's leading nutrition, health and wellness company. It is the biggest food company in the world with sales of CHF 107.6 billion in 2007, and net profit of CHF 10.6 billion. It has factories and operations in almost every country in the world.
NESTLÉ in the Philippines
Although NESTLÉ products were already available in the Philippines as far back as 1895, it was not until 1911 that the NESTLÉ and Anglo Swiss Condensed Milk Company was established in the country, with its first sales office in Binondo, Manila. The Company was forced to suspend its operations during World War II, but soon made a comeback after Liberation, under a new name: Filipro, Inc. In
1960, NESTLÉ S.A. and San Miguel Corporation entered into a partnership resulting in the formation of
Nutritional Products, Inc. (Nutripro). In 1962, Nutripro’s first factory started operations in Alabang,
Muntinlupa to manufacture NESCAFE. Through the years, other manufacturing facilities were established in Cabuyao, Cagayan de Oro, Lipa, Quezon City, and Marikina to meet the growing demand for NESTLÉ products in the country. In 1977, Filipro, Inc., the trading company, and Nutripro Inc., the manufacturing company, merged under the name Filipro, Inc. In 1986, Filipro, Inc. changed to its present name as NESTLÉ Philippines, Inc. In 1991, NESTLÉ pioneered food production and distribution in the AIJV (ASEAN Industrial Joint Venture), a regional trade complementation program. The Company participated in this program with the manufacture of breakfast cereals at the NESTLÉ Lipa Factory2, for export to the ASEAN markets. In late 1998, NPI became a wholly owned subsidiary of NESTLÉ S.A., following the latter’s purchase and acquisition of San Miguel Corporation’s entire equity shareholding in the company.
Today, NESTLÉ Philippines, Inc. (NPI) is a robust and stable organization, proud of its role in bringing the best food throughout the stages of the Filipino consumers’ lives. The company employs about 3,400 men and women all over the country. It is now among the top companies in the entire
NESTLÉ world. NESTLÉ produces and markets products under some of the country’s well known brands such as NESCAFE, NIDO, MILO, NESTEA, MAGGI, COFFEE-MATE, BEAR BRAND, NESVITA, among others.
Its product range has expanded to include coffee, milk, infant nutrition, infant food, beverages, nondairy creamer, food, ice cream and chilled dairy, breakfast cereals, confectionery and pet care. Over time, NESTLÉ’s quality and affordable products have become strong brands, number 1 or number 2 in their various categories, and a part of the Filipino way of life.

2

Today, the Lipa Factory is the NESTLÉ Group’s ASEAN Supply Center for breakfast cereals.

The NESVITA Brand
Adult Nutrition is expected to grow dramatically in the coming years due to an increase in awareness of the benefits of healthy living and healthy eating. In fact, the increasing costs of health care and the key roles that governments play in promoting self-health maintenance further contribute to supporting these trends. NESTLÉ has identified this opportunity for new consumer needs, as have other competitive food companies. However, NESTLÉ’s extensive experience in nutrition as well as its best-inclass R&D expertise provides it a significant advantage over competition. Beyond the business opportunity, NESTLÉ sees this dairy and cereal-based Adult Health and Wellness Solutions as key pillars in the strategic task of emerging as the trusted and most preferred Food and Beverage, Nutrition, Health and Wellness company in the world. The importance of this initiative required a global and focused approach to seize this significant opportunity. Therefore, the starting point was to create a Mega brand.
This is why NESVITA has been chosen as one of the leading international brand names for dairy and cereal-based products which offer specific health benefits for adults.
NESVITA as a name can be interpreted as VITA for Life and Vitality in Latin, and in English for
Vital and Vitality, and can be easily associated with NESTLÉ. Hence, a good brand name potential to be built as a strong NESTLÉ brand for a range of cross category products focusing on nutrition, health and wellness. NESVITA was first launched in 1991 in Taiwan as an instant cereal beverage in single serve sachets to enter the rapidly expanding cereal beverage market. Changing eating habits, as well as the trend towards convenience and healthy nutrition, have driven the subsequent launches of NESVITA cereal beverage into China, Hong Kong, Thailand and Philippines in 1994.
In general, the good taste and good nutritional image of the NESVITA cereal beverage are the generally perceived values of the brand. It has been recognized that this basic brand equity allowed for the brand to be expanded firstly into different nutritional propositions, then more recently into different product formats such as cereal bars, adult milk, and yogurt.
In the Philippines, NESVITA the brand was first introduced commercially via the NESVITA Cereal
Milk Drink product in 1994. At its launch it was seen mainly as a product for breakfast and an additional fiber supplement. Around 2004 to 2006 the Carnation Powdered Milk brands were transitioned under the NESVITA brand as NESVITA Pro-Bone Protection and NESVITA Pro-Weight Management. It was also around this time where introduction of other specialized milks such as NESVITA Pro-Heart and NESVITA
Pro-Digestion were launched. What used to be NESTLÉ 0% Yogurt Drinks and Cups were also adapted into the NESVITA Pro-Weight Management brand. NESVITA is now considered a MEGA BRAND in
NESTLÉ Standards! (See Appendix 1 in page 12 for listing of all NESVITA products currently sold in the
Philippines)

THE MARKET
Healthy lifestyle trend among adults
Living in a fast-paced environment, people seldom have time to take care of themselves because of the numerous and sometimes “monotonous” tasks that has to be accomplished daily. These are just some of the reasons why various diseases are very prevalent among adults such as heart disease, obesity, osteoporosis, tuberculosis, and the like. When a person reaches the age of 30 years old, a biological condition called “somatopause” occurs. This is simply a decline in overall body performance characterized by slower metabolism, lower recovery, decreased mobility, shorter endurance, reduced mental alertness and shorter memory.
People in general want to enjoy their life to the fullest. To enjoy life, one has to take care of his/her body. There is NO quick solution to living a healthy life. It takes a lot of effort and commitment in order to live a healthy lifestyle. Nowadays, there is a growing trend on healthy living amongst adults.
It can be in terms of eating the right food (high fiber, low calorie, no saturated fat, etc.) as well as engaging in physical activities (gym, running/jogging, sports, etc.).
Because of this emerging trend there are a lot of food brands, specifically beverages focusing on adult, health & wellness such as Del Monte, Lipton, NESVITA, Anlene, C2 , and many more. Even traditionally “unhealthy” brands such as Coke (i.e. Coke Light and Coke Zero) and Pepsi (i.e. Pepsi Max) have added “healthier” alternatives to their regular portfolio. Below are some of the brands under each of the beverages that promote health and wellness: o Softdrinks & Juices – Coke Light, Coke Zero, Del Monte Fit & Right, C2 Lite, FAB, etc.

o

Milk & Yoghurt – Non-fat Milk such as NESVITA Pro-Weight and Anlene, NESTLÉ Low Fat
Fresh Milk, NESTLÉ Yoghurt

o

Tea – Lipton Green Tea, Imported Green Tea variants

o

Coffee – Nescafe sugar free, Nescafe FIT (Teavigo)

o

Cereal Beverages – NESVITA Cereal Milk Drink, Energen, Quaker Q-Vital, BEAR BRAND
Busog Lusog

Total market for healthy beverages for adults, is approximately worth Php 44.5 billion.

Market Segment
NESVITA Cereal Milk Drink belongs to the Breakfast Cereals Category based on Nielsen’s definition. This category is further divided into three segments namely ready-to-eat cereals, all-in-one cereals and hot cereals. (See Exhibit 1 for the Breakfast Cereal Category and its segments)

EXHIBIT 1: THE BREAKFAST CEREAL CATEGORY AND ITS

THE BREAKFAST CEREALS CATEGORY
TOTAL BREAKFAST
CEREALS CATEGORY
Ready-to-Eat
cereals

Primarily designed to be consumed w/ milk

All-in-one cereals Instant Cereal
Beverage

HOT cereals Needs to be cooked
(Quick Cooking) / Instant

CP PHILS

The Ready-to-Eat Cereals segment or popularly known as Breakfast Cereals are cereal based ready to eat products made of wheat, corn, rice, oats and are primarily designed to be consumed with cold milk (either powdered or ready to drink). The pioneer in this segment is the Kellogg Company which came out with the first ready to eat cornflakes back in 1906.
Sub-segments and Players:
Kids - NESTLÉ Koko Krunch, Kellogg’s Frosties, Oishi Choco Flakes, etc.
Family – NESTLÉ Corn Flakes, Kellogg’s Corn Flakes, etc.
Adults – NESTLÉ Fitnesse, Kellogg’s Special K, Post Banana Nut Crunch
The Hot Cereals segment is primarily what we know as oats/oatmeal. The pioneer of this segment is the Quaker Oats Company which came out with the first oatmeal product back in 1901.
Primarily consumed for breakfast and is known to be good in lowering cholesterol (soluble fiber content in oats).
Sub-segments and Players:
Family – Quaker Oats, Golden Oats, Australia Harvest, NESVITA Oatmeal
Unlike the ready-to-eat cereals, oatmeal is still generally known as an all-family product being passed down from generations to generations although recently there have been a lot of innovations in the category such as instant oatmeal (just add hot water) and flavored oatmeal (chocolate, banana, etc.) and fortified oatmeal (added vitamins & minerals)

The All-in-One Cereals segment is composed of instant cereal beverages that are made of cereals (i.e. wheat, corn, oats, etc.). Most of the brands like NESVITA Cereal Milk Drink can be consumed either hot or cold. They are primarily consumed during breakfast as part of a meal or by itself (“pantawid gutom”). NESVITA Cereal Milk Drink was the pioneer in this segment when it was launched back in 1994. It was the only brand in the segment until the early 2000 when competition like
Quaker’s Q-Vital and Energen came into the picture.
Sub-segments and Players:
Kids – BEAR BRAND Busog Lusog, Nutrivim
Adults – NESVITA Cereal Milk Drink, Quaker’s Q-Vital and Energen
Market Size
The Total Breakfast Cereals category is worth Php 2.1 Bio per year. In terms of value (Php), the
Ready-to-Eat segment is the biggest contributor at 46% followed by Hot cereals at 39% and All-in-One segment at 15%. The category as a whole is growing but it is the Hot Cereals segment that continues to grow faster than the category at 18%. (See Exhibit 2 for the Market Size and Growth for each segment of the category)
EXHIBIT 2: MARKET SIZE & GROWTH PER SEGMENT OF THE BREAKFAST CEREALS CATEGORY

Segment
Ready-to-Eat
All-in-One
Hot Cereals
Total Category

Value
973 M
308 M
831 M
2.1 B

Value
% Cont
46%
15%
39%
100%

%Growth
6%
1%
18%
10%

Volume
2,500 mt
871 mt
6,183 mt
9,555 mt

Volume
% Cont
26%
9%
65%
100%

% Growth
4%
4%
9%
7%

Based on: 2008 MAT TY May Nielsen RTA

In terms of volume, the Total Breakfast Cereals category is about 10,000 Metric Ton category per year. The Hot cereals segment is the biggest contributor at 65% followed by Ready-to-Eat segment at 26% and All-in-One segment at 9%. The category as a whole is growing but it is the hot cereals segment that continues to grow faster than the category at 9%.
Household Penetration by Segment
Based on AC Nielsen’s Retail Audit report as of May 2008 in a base of 14.5 mio households3, the Hot
Cereal segment has a penetration of 22%, the Ready-to-Eat segment has a penetration of 18% and the
All-in-One segment has the lowest penetration at 11%. This shows that there is still a lot of opportunity for penetration for the total breakfast cereals category and in each of its segments. The highest opportunity for penetration can be found in the All-in-One segment.
3

average of 5 members per household

The All-in-One Market Segment & Its Key Players
The All-in-One Segment has 3 key players -- NESVITA Cereal Milk Drink, Energen, and Quaker QVital. A new entrant has been launched last May 2008 which is the BEAR BRAND Busog Lusog. NESVITA
Cereal Milk Drink is the most expensive at around Php12.7, followed by Quaker Q-Vital at Php 11.4, while Energen is priced lower at Php 5.9 and BEAR BRAND Busog Lusog priced lowest at around Php 5.6.
Customer profile of each player can be seen below:
NESVITA CEREAL MILK DRINK usage spans social status
Females
cuts across age more working than non-working

QUAKER Q-VITAL slightly skews towards Class C appeals to both genders cuts across age and working status

ENERGEN middle class predominantly females
31-40 years old

BEAR BRAND BUSOG LUSOG lower class
Kids

NESVITA Cereal Milk Drink is not only the market leader in the segment, at 55% in terms of volume and 69% in terms of value but is the pioneer in this segment when it was launched back in 1994.
The closest competitor is Energen which is about 29% of the market. Followed by Quaker Q-Vital at 8% and BEAR BRAND Busog Lusog at 3%. (See Exhibit 3 for Market Share of each player)
EXHIBIT 3: MARKET SHARE OF PLAYERS IN THE ALL-IN-ONE SEGMENT
MARKET SHARE
NESVITA Cereal Milk Drink
Energen
Quaker Q-Vital
BEAR BRAND Busog Lusog

VALUE
69%
16%
9%
3%

VOLUME
55%
29%
8%
3%

Based on: 2008 MAT TY May Nielsen RTA

NESVITA CEREAL MILK DRINK
Product description
NESVITA Cereal Milk Drink is an instant cereal beverage made of wheat, milk and vitamins. It’s primary benefit is it’s fiber content which helps smoothen the digestion as well as the natural goodness of milk (calcium) and vitamins (A, E & C).
NESVITA Cereal Milk Drink is primarily consumed during breakfast as part of a meal or by itself
(“pantawid gutom”) since this beverage is “filling” due its cereals flakes & rice crispies content. There

are also snacking occasions for the brand since it is considered a “healthier” alternative to the usual merienda fare such as pansit, chips, and the like. A serving of NESVITA Cereal Milk Drink is about 120 calories, only 6% of RENI of a 2000 calorie per day requirement for an adult.
NESVITA Cereal Milk Drink comes in single serve sachets of 30g. Available in three variants: original (50% of the business), sweet corn (27%) and choco malt (23%).
Product Positioning
NESVITA Cereal Milk Drink is targeted to females aged 18-29 years old as the cereal beverage which makes you feel beautiful inside (healthy digestion brought about by the fiber content and complemented by the goodness of milk & vitamins) and out (a healthy digestion shows outside as well)
Product Key Selling Points




Quality product made by NESTLÉ, the most trusted food company in the world
Wholesome goodness in every serving: wheat, milk & vitamins for only Php 12.75
Available in three variants: original, sweet corn and choco malt

Product Packaging & Presentation
NESVITA Cereal Milk Drink is packed in single serve sachets. It can be bought per piece for trial or by boxes of 10’s or by 5’s. (See Apendix 2 in page 13 for Packaging of NESVITA Cereal Milk Drink)



NESVITA Cereal Milk Drink 30g single serve sachet
NESVITA Cereal Milk Drink: Box of 5’s and 10’s

Product Segmentation
NESVITA Cereal Milk Drink targets the ABC segment of the market as can be seen in the household penetration of the product (See Exhibit 4 for Household Penetration of NESVITA Cereal Milk
Drink). Its consumers are primarily females ages 18-29 years old, more working than non-working. These are active people who engage in some form of physical activity or exercise. They put a premium on convenience but are not willing to sacrifice on either taste or nutrition.

EXHIBIT 4: HOUSEHOLD PENETRATION OF NESVITA CEREAL MILK DRINK

SEC

# of HH

HH Penetration
NESVITA

AB

200,817.00

21%

3%

C

2,217,204.00

18%

31%

D

9,214,569.00

8%

62%

E

6,055,092.00

3%

5%

% Contribution

Product Usage
1.
2.
3.
4.

Open the sachet of NESVITA Cereal Milk Drink
Pour entire content to a mug or glass
Add approximately 150ml of hot or cold water (depending on preference)
Stir and enjoy!

Distribution – Availability and Visibility
NESVITA Cereal Milk Drink is available in all leading supermarkets, groceries, convenience stores and selected drugstores nationwide. It is not available in smaller trade channels such as market stalls & sari-sari stores because it is not the right channel for the product due to its premium price.
In the supermarkets & groceries, NESVITA Cereal Milk Drink is placed in the breakfast cereals aisle/gondola together with Ready-to-Eat cereals and Hot Cereals. Being the market leader in the All-InOne segment: NESVITA Cereal Milk Drink enjoys the biggest share of shelf space vs. it’s competitors
(60% of shelf share).
In the convenience stores and drugstores, it is situated near other single-serve categories/products (i.e. coffee, tea, juice, oatmeal, etc.). It leverages on the NESTLÉ distribution network o Direct Key Accounts – SM, Robinsons, Shopwise, Puregold, Mercury Drug o Via Distributors – Regional Key Accounts, Groceries, Market Stalls & Sari-Sari Stores

Promotion
NESVITA Cereal Milk Drink is heavily promoted in TV, Print, PR, Website, Movie sponsorship,
Sampling, Events, and more importantly in-store merchandising via Actmedia or traditional Point of
Purchase or Poinf of Sales materials. (See Appendix 3 in page 14 for current promotional materials of
NESVITA Cereal Milk Drink)

During it’s early years, NESVITA Cereal Milk Drink was targeted to kids (tagline – NESVITA breakfast you can drink) but eventually shifted to talking to adults since it was found out that adults are the one who consume the product more than kids due to it’s healthy and convenient offering (i.e. fiber).
Last year, NESVITA Cereal Milk Drink re-launched the brand by having the beautiful Marian
Rivera as their celebrity brand endorser, arguably, the hottest female celebrity in the Philippines right now. She was the perfect fit for NESVITA Cereal Milk Drink’s latest campaign: Feel Beautiful Inside &
Out.
*feel beautiful inside – via NESVITA = fiber, milk & vitamins
*feel beautiful outside – if you feel beautiful (good) inside, it shows outside as well
The ad featured Marian Rivera in her natural self (not as celebrity, not as Marimar, or any of her alter egos) and how she stays beautiful inside & out. One of the key points of the ad was that Marian only says the word “beautiful” twice. Thus, truly highlighting how a person can feel “beautiful” by taking in a cup of NESVITA Cereal Milk Drink.
The campaign was also timed during the launch of her 2nd teleserye: Dyesebel to maximize the affinity with its chosen female celebrity. Thus, this campaign enabled the brand to generate a lot of awareness, consideration and trial. This was the first time that NESVITA Cereal Milk Drink used a celebrity endorser in its ad campaign.
Pricing
NESVITA Cereal Milk Drink is the most expensive brand in the segment. Its direct competition are Quaker’s Q Vital and Oishi’s Day to Day cereal drinks in terms of pricing. Low priced competition primarily Energen is more than 50-55% cheaper vs. NESVITA

BRAND

PRICE

INDEX

NESVITA

12.7

100%

Q Vital

11.4

90%

Oishi Day to Day

9

71%

Nutrivim

6.6

52%

Energen

5.9

46%

BEAR BRAND Busog Lusog

5.6

44%

It is my belief that to combat Energen, NESTLÉ decided to launch BEAR BRAND Busog Lusog which is currently the cheapest cereal beverage in the market. Also unlike NESVITA, BEAR BRAND Busog
Lusog is available in the market stalls and sari-sari stores which can fight head on with Energen in terms of distribution.
Substitutes
There are a lot of healthy beverages that are more established in the market such as coffee, tea, juices, chocolate beverages, mineral water, etc. The cereal beverages or cereal drinks category is still a very small segment but continues to grow. The main advantage still of this segment is that it is “filling” versus other healthy beverages or drinks.

THE CHALLENGE
NESVITA Cereal Milk Drink is the most established product in the current portfolio of the NESVITA brand here in the Philippines. This product drives approximately 50% of the business of total NESVITA.
A lot of players have started to challenge the product since its entry in 1994. In fact some of them, particularly Energen, has been gaining edge with NESVITA Cereal Milk Drink, via its low-cost pricing and extensive distribution.
Since NESVITA Cereal Milk Drink is but just one of the numerous products under the brand name
NESVITA, it cannot reposition itself without misaligning itself with the rest of the product portfolio under the NESVITA brand. This limits the product’s options in a way to fight head on with the more aggressive players of the market, at least in terms of price and positioning.
Given this situation how then can the brand grow further without changing its positioning as a
“premium” cereal beverage brand targeting mainly adults who are into a healthy lifestyle?

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