After Coffee, It's Dinner Time at Nestle
The article "After Coffee, It's Dinner Time at Nestle" by Carol Ryan talks about how Nestle is thinking about making products for either babies or pets. The Chief Executive of Nestle, Mark Schneider, is currently trying to decide what category has the highest possibility of selling more: pet food, infant meals, or bottled water.
Nestle has existing water brands such as San Pellegrino and Perrier, which make low operating margins for the company. Therefore, a water deal is very unlikely because the company is trying to improve its margins not make the lower.
Baby food is attractive and sales for baby formula should grow by 6% between now and 2023. A potential candidate for baby food that Nestle is looking at is Abbott Laboratories. Abbott Laboratories' brand Similac, can make Nestle the U.S. leader in baby food. The only problem with this is that baby food brands aren't on the market.
Pet food sales are also growing at 6%. Nestle has existing pet food brands such as Friskies and Dog Chow and they both make an operating margin above the company's set goal. Nestle is looking to buy Champion because people in well developed countries are spending more to spoil their pets and Champion offers premium products.
Baby food and pet food are both appealing to Nestle and it all depends on what product makes more sales.
I found this article interesting because Nestle is looking for ways to expand its product variety, which depends on whether there's a lot of babies who need baby food or pets being spoiled. This article is related to class because it has to do with new product development and the four Ps.
Karla Gorostieta
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Published by Carol Ryan on January 9, 2019 7:07 a.m.ET
Thats crazy but they should go for baby food instead.
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