Nestlé S.A.
Address:
Avenue Nestlé 55
CH-800 Vevey
Switzerland
Telephone: 41-21-924-2111
Fax: 41-21-924-28-13
http://www.nestle.com
Statistics:
Public Company
Incorporated: 1866 as Anglo-Swiss Condensed Milk Company
Employees: 253,000
Sales: CHF 86.76 billion ($76.66 billion) (2004)
Stock Exchanges: Basle Geneva Zurich Amsterdam Brussels Frankfurt London Paris Tokyo Vienna OTC
Ticker Symbols: NESN; NSRGY (ADRs)
NAIC: 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing; 311520 Ice Cream and Frozen Dessert Manufacturing; 311511 Fluid Milk Manufac- turing; 311422 Specialty Canning; 311411 Frozen Fruit, Juice, and Vegetable Processing; 311412 Frozen Specialty Food Manufacturing; 311230 Breakfast Cereal Manufacturing; 311111 Dog and Cat Food Manufacturing; 311320 Chocolate and Confectionery Manufacturing from Cacao Beans; 312111 Soft Drink Manufacturing; 311930 Flavoring Syrup and Concentrate Manufacturing; 311920 Coffee and Tea Manufacturing; 311823 Dry Pasta Manufacturing; 311999 All Other Miscellaneous Food Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 325620 Toilet Preparation Manufacturing; 551112 Offices of Other Holding Companies
Company Perspectives:
Quality is the essential ingredient in all of our brands and the reason why millions of people choose Nestlé products every day. Our consumers have come to trust in Nestlé's commitment to excellence and turn to Nestlé brands to maintain nutritional balance in a fast paced world.
Key Dates:
1866: The Anglo-Swiss Condensed Milk Company is founded in Cham, Switzerland.
1867: Henri Nestlé begins selling cow's milk-food in Vevey, Switzerland.
1900: Nestlé opens a factory in the United States.
1905: Nestlé and the Anglo-Swiss Condensed Milk Company merge.
1938: Nestlé introduces Nescafe.
1974: Nestlé enters the nonfood business, becoming a major shareholder of the cosmetics company L'Oréal.
1979: After numerous name changes, Nestlé S.A. is adopted as the official corporate title of the company.
1985: Nestlé acquires Carnation and Hills Brothers Inc.
1992: Nestlé acquires Perrier.
1998: Nestlé acquires the Spillers pet food business belonging to Dalgety PLC, making it the second largest pet food maker in Europe.
2002: Nestlé acquires Ralston-Purina to become co-leader in the global pet food business.
2003: Nestlé acquires Dreyer's Grand Ice Cream.
2005: Chief executive officer Peter Brabeck-Letmathe is named chairman of the board.
Company History:
Nestlé S.A. is the largest food and beverage company in the world. With a manufacturing facility or office in nearly every country of the world, Nestlé often is referred to as "the most multinational of the multinationals." Nestlé markets approximately 7,500 brands organized into the following categories: baby foods, breakfast cereals, chocolate and confectionery, beverages, bottled water, dairy products, ice cream, prepared foods, foodservice, and pet care.
Early History
While serving as the American consul in Zurich, Charles Page decided that Switzerland, with its abundant milk supply and easy access to the whole European market, was the perfect location for a condensed milk factory. The first canned condensed milk had been produced in the United States by Gail Borden some ten years before, and originally Page planned to produce and sell "Borden Milk" in the European market as a licensee. The plan fell through, however, so in 1866 he established the Anglo-Swiss Condensed Milk Company as a limited company in Cham, Switzerland.
The company's name was meant to flatter the British, to whom Page hoped to sell a great deal of his condensed milk. Anglo-Swiss first expanded its operations beyond Switzerland's borders in 1872, when it opened a factory in Chippenham, England. Condensed milk rapidly became a staple product in European cupboards--the business downturn in 1872 and the depression of 1875 did not affect the firm's sales. Charles Page died in 1873, leaving the company in the hands of his brother George and Anglo-Swiss's other investors. The next year, Anglo-Swiss undertook further expansion in England by purchasing the Condensed Milk Company in London. By 1876 sales were almost four times their 1872 level.
Meanwhile, in Vevey, Switzerland, in 1867 Henri Nestlé began selling his newly developed cow's-milk food for infants who could not be breastfed. Demand for his Farine Lactée Nestlé soared. Between 1871 and 1873, daily production more than doubled, from fewer than 1,000 tins a day to 2,000. Nestlé's goal was to bring his baby food within everyone's reach, and he spared no effort in trying to convince doctors and mothers of its benefits. But while his energy and good intentions were nearly endless, his financial resources were not. By 1873, demand for Nestlé's product exceeded his production capabilities, resulting in missed delivery dates. At 61, Nestlé was running out of energy, and his thoughts turned to retirement. Jules Monnerat, a former member of parliament who lived in Vevey, had long eyed the business, and in 1874 Nestlé accepted Monnerat's offer of CHF 1 million. Thus, in 1875, the company became Farine Lactée Henri Nestlé with Monnerat as chairman.
In 1877 Nestlé faced a new competitor when the Anglo-Swiss Condensed Milk Company--already the leading manufacturer of condensed milk in Europe--decided to broaden its product line and manufacture cheese and milk food for babies. Nestlé quickly responded by launching a condensed milk product of its own. George Page tried to buy the competing company outright, but he was firmly told that Nestlé was not for sale. Turning his attention elsewhere, he purchased the Anglo-Swiss Company's first factory in the United States in 1881. The plant, located in Middletown, New York, was built primarily to escape import duties, and it was soon successful enough to challenge Borden's supremacy in the U.S. condensed milk market. It also presented a drawback: George Page spent so much time there that Anglo-Swiss began to lose its hold on Europe, much to the delight of Nestlé. After George Page's death in 1899, the Anglo-Swiss Condensed Milk Company decided to sell its American business to Borden in 1902 so that it could concentrate on regaining market share in Europe.
Until 1898 Nestlé remained determined to manufacture only in Switzerland and export to its markets around the world. But that year the company finally decided to venture outside Switzerland with the purchase of a Norwegian condensed milk company. Two years later, in 1900, Nestlé opened a factory in the United States, and quickly followed this by entering Britain, Germany, and Spain. Early in the 1900s, Nestlé also became involved in chocolate, a logical step for a company based in Vevey, the center of the Swiss chocolate industry. Nestlé became a partner in the Swiss General Chocolate Company, the maker of the Peter and Kohler brands. Under their agreement, the chocolate company produced the first Nestlé brand milk chocolate, while Nestlé concentrated on selling the Peter, Kohler, and Nestlé brands around the world.
Merger of Nestlé and Anglo-Swiss in 1905
In 1905 Nestlé and the Anglo-Swiss Condensed Milk Company finally quelled their fierce competition by merging to create the Nestlé and Anglo-Swiss Milk Company. The new firm would be run by two registered offices, one in Vevey and one in Cham. With Emile-Louis Roussy as chairman, the company now included seven factories in Switzerland, six in Great Britain, three in Norway, and one each in the United States, Germany, and Spain.
In response to an increase in import duties in Australia--Nestlé's second largest export market--the company decided to begin manufacturing there in 1906 by buying a major condensed milk company, the Cressbrook Dairy Company, in Brisbane. In the next few years production and sales continued to increase as the company began to replace sales agents with subsidiary companies, particularly in the rapidly growing Asian markets.
Most of its factories were located in Europe, however, and when World War I broke out in 1914, Nestlé's operations, particularly in such warring countries as Britain and Germany, were seriously affected. Although production continued in full force during the early months of the war, business soon grew more difficult. By 1916 fresh milk shortages, especially in Switzerland, meant that Nestlé's factories often sold almost all of their milk supplies to meet the needs of local towns. Shipping obstacles, increased manufacturing and operating costs, and restrictions on the use of production facilities added to Nestlé's wartime difficulties, as did a further decrease in fresh milk supplies due to shortages of cattle.
To deal with these problems and meet the increased demand for its products from governments supplying their troops, Nestlé decided to expand in countries less affected by the war and began purchasing existing factories, particularly in the United States, where it established links with several existing firms. By 1917 Nestlé had 40 factories, and in 1918, its world production was more than double what it was in 1914. Nestlé pursued the same strategy in Australia; by 1920 it had acquired a controlling interest in three companies there. That same year, Nestlé began production in Latin America when it established a factory in Araras, Brazil, the first in a series of Latin American factories. By 1921, the firm had 80 factories and 12 subsidiaries and affiliates. It also introduced a new product that year--powdered milk called Lactogen.
It did not take long for the effects of such rapid expansion to catch up with the company, however. Nestlé and Anglo-Swiss reported its first loss in 1921, to which the stock market reacted with panic, making matters worse. The company explained that the CHF 100 million loss was due to the rising prices of raw materials such as sugar and coal, and a trade depression that had caused a steady fall in consumer purchasing power, coupled with falling exchange rates after the war, which forced the company to raise prices.
To battle the storm, the company decided to reorganize both management and production. In 1922 it brought production in line with actual sales by closing some of its factories in the United States, Britain, Australia, Norway, and Switzerland. It also hired Louis Dapples, a banking expert, to put the company back in order. Dapples directed Nestlé with an iron fist, introducing stringent financial controls and reorganizing its administration. By 1923, signs of improvement were already evident, as Nestlé's outstanding bank loans had dropped from CHF 293 million in 1921 to CHF 54.5 million in 1923. Meanwhile in France, Belgium, Italy, Germany, and South Africa, production facilities were expanded. By consolidating certain operations and expanding others, Nestlé was also able to widen its traditional range of products.
Overall, the late 1920s were profitable, progressive times. In addition to adding some new products of its own--including malted milk, a powdered beverage called Milo, and Eledon, a powdered buttermilk for babies with digestive disorders--the company bought interests in several manufacturing firms. Among them were butter and cheese companies, as well as Sarotti A.G., a Berlin-based chocolate business that began manufacturing Nestlé, Peter, Cailler, and Kohler chocolate. In 1928, under the direction of Chairman Louis Dapples, Nestlé finally merged with Peter, Cailler, Kohler, Chocolats Suisses S.A.--the resulting company of a 1911 merger between the Swiss General Chocolate Company and Cailler, another leading firm--adding 13 chocolate plants in Europe, South America, and Australia to the growing firm.
Expansion During the Great Depression
Nestlé was becoming so strong that it seemed even the Great Depression would have little effect on its progress. In fact, its U.S. subsidiary, Nestlé's Food Company Inc. of New York, barely felt the stock market crash of 1929. In 1930 Nestlé created new subsidiaries in Argentina and Cuba. Despite the Depression, Nestlé added more production centers around the world, including a chocolate manufacturer in Copenhagen and a small factory in Moravia, Czechoslovakia, to manufacture milk food, Nescao, and evaporated milk. Factories were also opened in Chile and Mexico in the mid-1930s.
While profits were down 13 percent in 1930 over the year before, Nestlé faced no major financial problems during the Depression, as its factories generally maintained their output and sales were steady. Although Nestlé's New York-based subsidiary, renamed Nestlé's Milk Products Company, was more affected than those in other countries, U.S. sales of milk products were steady until 1931 and 1932, when a growing public frugality began to cause trouble for more expensive but established brands such as Nestlé's. Profit margins narrowed, prices dropped, and cutthroat competition continued until 1933, when new legislation set minimum prices and conditions of sales.
The markets, such as the United States, that were among the first to feel the effects of the Depression were also the first to recover from it. The Depression continued in Switzerland, however. Nestlé products manufactured there could no longer compete on international markets since Swiss currency exchanges were made especially difficult from the early 1930s, when many major countries devalued their currencies, until 1936, when Switzerland finally did likewise. The company decided to streamline production and close several factories, including its two oldest, in Cham and Vevey.
Decentralization efforts begun during the Depression continued to modify the company's structure gradually. By 1936, the industrial and commercial activity of the Nestlé and Anglo-Swiss Condensed Milk Company itself was quite limited in comparison with the considerable interests it had in companies manufacturing and selling its products. More than 20 such companies existed on five continents. In effect, the firm had become a holding company. Consequently, the Nestlé and Anglo-Swiss Condensed Milk Company Limited was established to handle production and marketing on the Swiss market; the parent company officially became a holding firm, called the Nestlé and Anglo-Swiss Holding Company Ltd.; and a second holding company, Unilac Inc., was created in Panama by a number of Nestlé's overseas affiliates.
Nescafé Instant Coffee Debuting in 1938
In 1937 Louis Dapples died, and a new management team, whose members had grown up with the organization, took over. The team included Chairman Edouard Muller, formerly managing director; Carl J. Abegg, vice-chairman of the board; and Maurice Paternot, managing director. In 1938 Nestlé introduced its first nonmilk product: Nescafé. The revolutionary instant coffee was the result of eight years of research, which had begun when a representative of the Brazilian Coffee Institute asked Louis Dapples if Nestlé could manufacture "coffee cubes" to help Brazil use its large coffee surplus. Although coffee crystals and liquid extracts had been tried before, none had satisfactorily preserved a coffee taste.
Nestlé's product took the form of a soluble powder rather than cubes, allowing users to control the amount of coffee they used. Although Nestlé originally intended to manufacture Nescafé in Brazil, administrative barriers were too great, so Nescafé was first manufactured in Switzerland. Limited production capacity meant that it was launched without the elaborate marketing tactics usually used for products with such potential.
Nescafé quickly acquired a worldwide reputation, however, after it was launched in 1939 in the United States, where it did exceptionally well. Nestea, a soluble powdered tea, also made a successful debut in the early 1940s.
World War II had a dire effect on Nestlé. In 1939 profits plummeted to $6 million, compared to $20 million the year before. As in the last war, the company was plagued by food shortages and insufficient supplies of raw materials. To wage its own battle against the war, the company decided to split its headquarters at Vevey and transfer part of the management and executive team to an office in Stamford, Connecticut, where it could better supervise distant markets. Nestlé continued under control of dual managements until 1945.
But the war was not all bad for Nestlé. When the United States became involved in 1941, Nescafé and evaporated and powdered milk were in heavy demand from American armed forces. Nestlé's total sales jumped from $100 million before the war to $225 million in 1945, with the greatest increase occurring in North America, where sales went from $14 million to $60 million. With the end of the war, Nestlé's European and American branches were able to discuss future plans without fear of censorship, and the company could begin to face the challenge of rebuilding its war-torn subsidiaries. Nestlé also relaunched Nescafé and baby foods and began to research new products extensively. Researchers focused on the three areas Nestlé considered most likely to affect the food industry's future: an increase in world population, rising standards of living in industrialized countries, and the changing social and economic conditions of raw-material-producing countries.
Postwar Growth Through Merger and Acquisition
In 1947 Nestlé merged with Alimentana S.A., the manufacturer of Maggi seasonings, bouillon, and dehydrated soups, and the holding company changed its name to Nestlé Alimentana Company. Edouard Muller became the first chairman of Nestlé Alimentana, but he died in 1948, before the policies he helped formulate put the company on the road to a new future. Carl Abegg assumed leadership of the board.
In 1950 Nestlé acquired Crosse and Blackwell, a British manufacturer of preserves and canned foods. Nestlé hoped its $24 million investment would serve as a marketing outlet for Maggi products, but the plan was less than successful, primarily because Crosse and Blackwell could not compete in the United Kingdom with H.J. Heinz Company. Similar setbacks occurred in 1963, when Nestlé acquired Findus frozen foods in Scandinavia for $32 million. Although the company performed well in Sweden, it encountered difficulties in other markets, where the British-Dutch giant Unilever reigned. While parts of the Findus operation eventually became profitable, Nestlé merged its German, Italian, and Australian Findus branches with Unilever. The development of freeze-drying in 1966 led to Taster's Choice, the first freeze-dried coffee, as well as other instant drinks.
In 1971 Nestlé acquired Libby, a maker of fruit juices, in the United States, and in 1973 it bought Stouffer's, which took Nestlé into the hotel and restaurant field and led to the development of Lean Cuisine, a successful line of low-calorie frozen entrees. Nestlé entered the nonfood business for the first time in 1974 by becoming a major shareholder in the French company L'Oréal, a leading cosmetics company. Nestlé diversified further in 1977 with the acquisition of Alcon Laboratories, a Fort Worth, Texas, pharmaceutical company that specialized in ophthalmic products. Then, two years later, Nestlé purchased Burton, Parsons and Company Inc., an American manufacturer of contact lens products. The company adopted its present name--Nestlé S.A.--in 1979.
Facing Boycott in Late 1970s and Early 1980s
The 1970s saw Nestlé's operations in developing countries increase considerably. Of Nestlé's 303 manufacturing facilities, the 81 factories in developing nations contributed 21 percent of Nestlé's total production. In the mid-1970s, however, the firm faced a new problem as a result of its marketing efforts in these countries, when a boycott against all Nestlé products was started in the United States in 1977. Activists claimed that Nestlé's aggressive baby food promotions made mothers in developing countries so eager to use Nestlé's formula that they used it any way they could. The poverty-stricken areas had high rates of illiteracy, and mothers, unable to read and follow the directions, often mixed the product with local polluted water or used an insufficient amount of the expensive formula, unwittingly starving their infants. Estimates of Nestlé's losses as a result of the boycott, which lasted until the early 1980s, ranged as high as $40 million.
In 1981 Helmut Maucher became managing director of Nestlé and made this controversy one of his top priorities. He met with boycott supporters and complied with the World Health Organization's demands that Nestlé stop promoting the product through advertising and free samples. His direct confrontation of the issue contrasted with Nestlé's earlier low-profile approach and was quite successful in allaying its critics' fears.
Series of Major Acquisitions in the Later 1980s
Maucher also reduced overhead by turning over more authority to operating units and reducing headquarters staff. In addition, he spearheaded a series of major acquisitions. In 1985 Nestlé acquired Carnation, a U.S. manufacturer of milk, pet, and culinary products, for $3 billion, at the time one of the largest acquisitions in the history of the food industry. This was followed in 1985 by the acquisition of Hills Brothers Inc., the third largest U.S. coffee firm, which added ground roast coffee to Nestlé's product line. In the late 1980s, as food companies around the world prepared for the integration of the European Community in 1992, Nestlé continued to make major acquisitions. In 1988 the company paid £2.55 billion ($4.4 billion) for Rowntree Mackintosh PLC--a leading British chocolate manufacturer--marking the largest takeover of a British company by a foreign one to date. That same year Nestlé also purchased the Italian pasta maker Buitoni SpA.
Capital expenditures reached CHF 2.8 billion in 1991. Half was devoted to installation improvements, including data processing and automation, particularly in North America and Europe. The other half was spent expanding plants, primarily in Latin America and the Far East, areas where products were often based on local raw materials, tastes, and habits. That year Nestlé made 31 acquisitions, also adding a new factory in the People's Republic of China. Among the companies purchased were Alco Drumstick, a U.S. ice cream manufacturer with many European activities; Indra, a Swedish frozen-food maker; La Campiña, a Mexican evaporated milk producer; and 97 percent of Intercsokolàdé, a Hungarian chocolate maker. The latter was Nestlé's first venture into the newly opened markets of Eastern Europe.
In September 1991 Nestlé and The Coca-Cola Company formed a 50-50 joint-venture, Coca-Cola Nestlé Refreshment Company, to produce and distribute concentrates and bases for the production of ready-to-drink coffee and tea beverages. With an initial capitalization of $100 million the products, to be sold under the Nescafé and Nestea brand names, would be marketed worldwide save for Japan, primarily through Coca-Cola's international network of businesses.
Nescafé, sold in more than 100 countries by 1991, was launched in the Republic of Korea--Coca-Cola and Nestlé's first joint endeavor--as was Nescafé Cappuccino in Europe. Hills Bros. "Perfect Balance," a 50 percent-decaffeinated coffee, began selling in the United States, as did Nestea in cans at the beginning of 1992. By early 1992, a joint venture allowed the company to obtain a majority interest in Cokoladovny, a Czechoslovakian chocolate and biscuit producer. In addition, Nestlé in 1992 battled for and won, with a bid of $2.3 billion in cash, the French mineral water producer Source Perrier, though European regulators forced Nestlé to sell off some Perrier brands. That same year Nestlé took nearly full control of another mineral water concern, Vittel. Nestlé had acquired a 30 percent stake in Vittel in 1969, a move marking the company's first foray into mineral water.
Reemphasis on Core Food Area in Later 1990s
As the 1990s continued, Nestlé recommitted itself to its core food products area, never having been able to grow its healthcare and cosmetics sectors into significant parts of the overall business. The company sold off some of its health and beauty interests, retaining Alcon and the minority holding in L'Oréal--it still hoped to gain full control of the latter, which was privately controlled. Nestlé made other divestments as well, including Wine World Estates, a group of northern California wineries (sold in 1995); canned beans and pasta operations in Canada, a fresh meat business in Germany, and cold meat operations in Sweden (1996); Contadina canned tomato products in the United States, Sarotti chocolate and Dany sandwiches in Germany, and Locatelli brand cheeses in Italy (1997); and Libby's canned meat products, which were sold to International Home Foods for $126 million in 1998.
Acquisitions in the mid-to-late 1990s centered around mineral water, ice cream, and pet foods. In 1993 Nestlé purchased mineral water brands in the United States (Deer Park and Utopia) and Italy (Vera and San Bernardo), as well as ice cream brands in Italy, the Philippines, and South Africa. Added in 1994 were the Alpo pet food company in the United States and Warnke ice creams in Germany; the company also gained a majority stake in chocolate maker Goplana S.A. in Poland. Still further expansion of the ice cream sector came in 1995 with the purchase of Conelsa, the leader in the Spanish market; the chilled dairy products division of Pacific Dunlop in Australia; and Dolce S.A.E., the leading maker of ice cream in Egypt. That year Nestlé also acquired Ortega, a leading brand of Mexican food products in the United States. In 1997 Nestlé entered the Canadian ice cream market through the purchase of Ault and Dairy World, giving the company a 40 percent market share. In early 1998 Nestlé took full control of the San Pellegrino mineral water group and acquired Klim milk powders and Cremora coffee creamers from Borden Brands International. Also in 1998 the company secured the number two position in the European pet food market, trailing only Mars, through the £715 million ($1.2 billion) purchase of the Spillers pet food business of Dalgety PLC.
Despite all of this activity, Nestlé's acquisition pace slowed during the late 1990s as the company shifted toward organic growth starting in 1996. The numerous acquisitions had enabled Nestlé to gain a presence in various product areas in various countries. The company now had fewer countries and products that it wished to add to its portfolio. Other reasons for the shift to organic growth included the increasing price of acquisitions and antitrust concerns. Meanwhile, in June 1997 Peter Brabeck-Letmathe was named chief executive, taking over the day-to-day management of Nestlé from Maucher. In September 1998 Nestlé announced that Maucher would retire as chairman by the spring of 2000, being replaced by Rainer Gut, then chairman of the Credit Suisse Group.
Nestlé's aggressive marketing of infant formula once again became an issue in 1997 when a report called Cracking the Code was issued by the Interagency Group on Breastfeeding Monitoring (IGBM), which had conducted research in Bangladesh, Poland, South Africa, and Thailand. The IGBM concluded that several companies, including Nestlé, were in violation of the World Health Organization's International Code of Marketing of Breastmilk Substitutes, which had been adopted in 1981. According to the report Nestlé's code violations included supplying pregnant women and health workers with materials that promoted formula feeding but did not emphasize the superiority of breastfeeding over formula, and distributing free samples. Nestlé countered by calling the report biased and flawed, and by eliciting a response critical of Cracking the Code from an independent marketing research consultant.
At the dawn of the 21st century, Nestlé had about 500 factories in more than 78 countries, boasted sales exceeding CHF 70 billion, and was the undisputed leader in the food industry worldwide. Its portfolio included more than 8,500 brands. The company had set a goal of achieving 4 percent underlying sales growth each year, but failed to meet this target for 1998, largely because of economic downturns in southeast Asia, Latin America, and Eastern Europe.
Consolidation and Expansion in the Early 21st Century
It took several years before the character of the Brabeck-Letmathe era of leadership revealed itself. Initially, Brabeck-Letmathe managed the company in a fashion similar to his predecessor, Maucher. The pair, in fact, had agreed on a list of characteristics to remain unaltered during the two reigns of command, but after several years at the helm, Brabeck-Letmathe realized he needed to break the covenant, making one sweeping change in particular. Maucher had insisted that Nestlé retain its decentralized structure as a way to cater to local markets and tastes (Nestlé, for example, produced 200 different formulations of Nescafé), but Brabeck-Letmathe saw the company becoming uncompetitive so he began to consolidate its operations. The management of factories, which historically had been divided country by country, was broken into regional divisions. Further, products that were similar were organized into strategic business units, adding more cohesion to the operation of Nestlé's global business.
Maucher was remembered as a wheeler and dealer, executing an ambitious acquisition campaign during his decade-and-a-half in charge. Brabeck-Letmathe, in contrast, waited several years before making a major acquisition, preaching growth through internal means during his first years in office. When he did strike out on the acquisition trail, he gravitated toward companies involved in pet care, health, and nutritional products, steering Nestlé toward the higher, value-added market in which the company added basic ingredients to products. Nestlé acquired PowerBar in 2000, but Brabeck-Letmathe's master stroke occurred two years later when he spent $10.3 billion to acquire Ralston-Purina. The acquisition made Nestlé the joint world leader in the pet food business, putting the company alongside Mars, Incorporated, which owned the Pedigree, Sheba, and Whiskas brands. Next, Brabeck-Letmathe turned his attention to Nestlé's ice cream business, completing the acquisition of a German ice cream manufacturer named Schoeller in 2002. The following year, the company spent $2.8 billion to acquire majority control of Dreyer's Grand Ice Cream.
As Nestlé pressed forward under the leadership of Brabeck-Letmathe, the company plotted a future course that distinguished it from its rivals. Rival food conglomerates such as Unilever and Danone focused on narrowing their strategic focus, shedding businesses in an effort to increase their profit margins. Unilever, for example, shuttered more than 100 of its factories and reduced the number of its brands from 1,600 to 400 during the first three years of the decade. Nestlé chose a different path for its future, promising to get bigger as the years passed, emphasizing growth in areas designed to transform it from a food company into a food, health, and wellness company with a deeper involvement in nutritional products. Growth in this direction promised to be the legacy of Brabeck-Letmathe's tenure. The influence of his leadership was expected to increase as he completed his first decade of stewardship. In early 2005, Brabeck-Letmathe was named chairman of Nestlé, giving him the two most powerful positions at one of the largest companies in the world.
Principal Subsidiaries: EUROPE: Nestlé Deutschland AG (Germany; 97.2%); Blaue Quellen Mineral- und Heilbrunnen AG (Germany; 90.6%); Trinks GmbH (Germany; 90.6%); Alcon Pharma GmbH (Germany); Alois Dallmayr Kaffee OHG (Germany; 48.6%); Heimbs & Sohn GmbH & Co. KG (Germany; 48.6%); Azul Kaffee GmbH & Co. KG (Germany; 48.6%); Nüahr-Engel GmbH (Germany; 97.22%); Vittel Mineralwasser GmbH (Germany); Österreichische Nestlé GmbH (Austria); Nestlé Belgilux S.A. (Belgium); Perrier Vittel Belgilux S.A. (Belgium); Alcon-Couvreur S.A. (Belgium); Nestlé Sofia A.D. (Bulgaria; 99%); Nestlé Danmark A/S (Denmark); Premier Is A/S (Denmark); Nestlé España S.A. (Spain); Productos del Café S.A. (Spain); Davigel España S.A. (Spain); EYCAM Perrier S.A. (Spain); Alcon-Cusi S.A. (Spain); Helados y Congelados S.A. (Spain); Compañia del Frio Alimentario S.A. (Spain); Compañia Avidesa S.A. (Spain; 99.43%); Alimentos Congelados S.A. (Spain); Soumen Nestlé Oy (Finland); Nestlé France S.A.; France Glaces-Findus S.A.; Chambourcy S.A. (France; 99.9%); Herta S.A. (France); Davigel S.A. (France; 99.9%); Perrier Vittel France S.A.; S.A. des Eaux Minérales de Ribeauvillé (France; 98.3%); Société Conditionnement et Industrie S.A. (France; 77.9%); Eau Minérale Naturelle de Plancoët "Source Sassay" S.A. (France); Nestlé Coffee Specialties France S.A.; Nestlé Clinical Nutrition S.A. (France); Laboratoires Alcon S.A. (France); Nestlé Dairy Industry S.A.I. (Greece; 85.4%); Alcon Laboratories Hellas E.P.E. (Greece); Nestlé Italiana S.p.A. (Italy; 99.9%); SO.GE.AM S.p.A. (Italy); SO.GE.PLAST S.p.A. (Italy); Alcon Italia S.p.A. (Italy); Nestlé Hungaria Kft (Hungary); A/S Nestlé Norge (Norway); Nestlé Nederland B.V. (Netherlands); Alcon Nederland B.V. (Netherlands); Goplana S.A. (Poland; 76.97%); Nestlé Polska Sp. zo.o. (Poland); Naleczowianka Spolka zo.o. (Poland; 33.3%); Winiary S.A. (Poland; 83.28%); Nestlé Portugal S.A.; Longa Vida S.A. (Portugal); Sociedade das Aguas de Pisoes Moura S.A. (Portugal); Nestlé (Ireland) Ltd.; Nestlé Food S.r.o. (Czech Republic); Nestlé UK Ltd.; Perrier Vittel UK Ltd.; Buxton Mineral Water Company Ltd. (U.K.); Alcon Laboratories (U.K.) Ltd.; C.U. Rossiya (Russia; 93.21%); Nestlé Zhukovsky Ice Cream LLC (Russia; 80.48%); Nestlé Food LLC (Russia); Nestlé Food S.r.o. (Slovakia; 99.9%); Svenska Nestlé AB (Sweden); Jede AB (Sweden); Zoégas Kaffe AB (Sweden); Société des Produits Nestlé S.A.; Nestlé Suisse S.A.; Frisco-Findus AG (99.8%); Perrier Vittel Suisse S.A.; Alcon Pharmaceuticals Ltd.; Nestlé World Trade Corporation; Food Ingredients Specialities S.A.; Nestlé Coffee Specialties S.A.; Nestlé Türkiye Gida Sanayi A.S. (Turkey). AFRICA: Nestlé (South Africa) (Pty) Ltd.; Alcon Laboratories Pty Ltd. (South Africa); Nestlé Cameroun (Cameroon; 99.6%); Nestlé Côte d'Ivoire (Ivory Coast; 80.9%); Dolce S.A.E. (Egypt); Industrie du Froid S.A.E. (Egypt); Société des eaux minérales Vittor S.A.E. (Egypt; 88.5%); Nestlé Gabon (90%); Nestlé Ghana Ltd. (51%); Nestlé Guinée (Guinea; 99%); Nestlé Foods Kenya Ltd.; Nestlé's Products (Mauritius) Ltd.; Nestlé Maroc S.A. (Morocco; 93.4%); Nestlé Foods Nigeria PLC (57%); Nestlé Sénégal; Nestlé Tunisie (Tunisia; 59.2%); Nestlé Zimbabwe (Pvt) Ltd. AMERICAS: Nestlé Argentina S.A.; Alcon Laboratorios Argentina S.A.; Nestlé Bolivia S.r.l.; Nestlé Industrial e Comercial Ltda. (Brazil); Companhia Produtora de Alimentos (Brazil); Tostines Industrial e Comercial Ltda. (Brazil); Perrier Vittel de Brasil Ltda. (Brazil); Alcon Laboratorios do Brasil S.A. (Brazil); Nestlé Canada, Inc.; Midwest Food Products, Inc. (Canada; 50%); Laura Secord, Inc. (Canada); The Perrier Group of Canada Ltd.; Alcon Canada, Inc.; Nestlé Chile S.A. (99.5%); Alcon Laboratorios Chile Limitada; Nestlé de Colombia S.A.; Laboratorios Alcon de Colombia S.A.; Nestlé Costa Rica S.A.; Nestlé El Salvador S.A.; Nestlé Ecuador S.A. (74.7%); Neslandia S.A. (Ecuador); Nestlé USA, Inc.; Nestlé USA - Food Division, Inc.; Nestlé USA - Beverage Division, Inc.; Food Ingredient Specialities, Inc. (U.S.A.); Great Spring Waters of America, Inc. (U.S.A.); Nestlé Puerto Rico, Inc. (U.S.A.); Alcon Laboratories, Inc. (U.S.A.); Alcon (Puerto Rico), Inc. (U.S.A.); Nestlé Guatemala S.A.; Nestlé Hondureña S.A. (Honduras); Nestlé-JMP Jamaica Ltd.; Cremo Ltd. (Jamaica); Compañá Nestlé S.A. de C.V. (Mexico); Alimentos Findus S.A. de C.V. (Mexico); Industrias Alimenticias Club S.A. de C.V. (Mexico); Manantiales La Asuncion, S.A. de C.V. (Mexico); Alcon Laboratorios S.A. de C.V. (Mexico); Productos Nestlé (Nicaragua) S.A.; Nestlé Panamí S.A.; Nestlé Caribbean, Inc. (Panama); Nestlé Perú S.A. (93.1%); D'Onofrio S.A. (Peru; 80.6%); Sociedad Dominicana de Conservas y Alimentos S.A. (Dominican Republic; 75.7%); Compañia Dominicana de Alimentos Lacteos S.A. (Dominican Republic); Helados Nestlé S.A. (Dominican Republic); Nestlé Trinidad and Tobago Ltd.; Nestlé del Uruguay S.A.; Nestlé Venezuela S.A.; Chocolates Nestlé S.A. (Venezuela); Caramelos Royal C.A. (Venezuela). ASIA: Saudi Food Industries Co. Ltd. (Saudi Arabia; 51%); Nestlé Bangladesh Ltd. (60%); Nestlé Ice Cream L.L.C. (United Arab Emirates; 49%); Nestlé Hong Kong Ltd.; Nestlé Dairy Farm Hong Kong Ltd.; Nestlé India Ltd. (51%); P.T. Nestlé Indonesia (57.6%); P.T. Nestlé Confectionery Indonesia; P.T. Nestlé Asean (Indonesia) (60%); P.T. Supmi Sakti (Indonesia; 97%); OSEM Investments Ltd. (Israel; 39.7%); Nestlé Japan Ltd.; Nestlé-Mackintosh K.K. (Japan; 66%); Perrier Japon K.K. (Japan); Alcon Japan Ltd.; Nestlé Jordan Trading Co. Ltd. (49%); Nestlé Kuwait General Trading Co. W.L.L. (49%); Société pour l'Exportation des Produits Nestlé S.A. (Lebanon); Nestlé (Malaysia) Bhd. (52.7%); Nestlé Foods (Malaysia) Sdn. Bhd. (51%); Nestlé Products Sdn. Bhd. (Malaysia; 51%); Malaysia Cocoa Manufacturing Sdn. Bhd. (51%); Nestlé Asean (Malaysia) Sdn. Bhd. (60%); Nestlé Cold Storage (Malaysia) Sdn. Bhd. (51%); Milkpak Ltd. (Pakistan; 56.2%); Nestlé Philippines, Inc.; Nestlé Foods Korea Ltd.; Nestlé Shuangcheng Ltd. (China; 90%); Nestlé Dongguan Ltd. (China; 60%); Maggi Dongguan Ltd. (China); Nestlé Tianjin Ltd. (China); Nestlé Qingdao Ltd. (China); Nestlé Dairy Farm Tianjin Ltd. (China; 75%); Nestlé Dairy Farm Qingdao Ltd. (China); Nestlé Dairy Farm Guangzhou Ltd. (China; 60%); Nestlé Singapore (Pte) Ltd.; Nestlé Asean Singapore (Pte) Ltd. (60%); Nestlé Lanka Ltd. (Sri Lanka; 90.8%); Nestlé Taiwan Ltd.; Nestlé Distributors Ltd. (Taiwan); Foremost Foods (Taiwan) Ltd.; Alcon Pharmaceuticals Ltd. (Taiwan); Nestlé Products Thailand, Inc.; Nestlé Asean (Thailand) Ltd. (60%); Quality Coffee Products Ltd. (Thailand; 49%); Nestlé Foods (Thailand) Ltd.; Nestlé Trading (Thailand) Ltd. (49%); Nestlé Manufacturing (Thailand) Ltd.; Nestlé Ice Cream (Thailand) Ltd. (46.3%); Nestlé Vietnam Ltd.; Long An Mineral Water Joint Venture Company (Vietnam; 42.7%). OCEANIA: Nestlé Australia Ltd.; Petersville Australia Ltd.; Nestlé Echuca Pty Ltd. (Australia); Alcon Laboratories (Australia) Pty Ltd.; Nestlé (Fiji) Ltd. (67%); Nestlé Nouvelle-Calédonie S.A. (New Caledonia); Nestlé New Zealand Ltd.; Nestlé (PNG) Ltd. (Papua New Guinea); Nestlé Polynesia S.A. (French Polynesia); Nestlé Purina PetCare Co.
Principal Competitors: ConAgra Foods, Inc.; Groupe Danone; Kraft Foods Inc.
Further Reading:
- Choi, Candice, "Nestle to Shut Down Three St. Louis Plants," Daily News, April 2, 2005, p. 31.
- "Daring, Defying, to Grow--Nestlé," Economist (US), August 7, 2004, p. 56US.
- Hall, William, "Leading Swiss Banker to Be Nestlé Chairman," Financial Times, September 21, 1998, p. 26.
- ------, "Maucher Keeps His Claws in Nestlé," Financial Times, May 7, 1997, p. 26.
- ------, "Strength of Brands Is Key to Success," Financial Times, November 30, 1998, p. SII.
- Harrisson, Pierre, L'Empire Nestlé, Lausanne, Switzerland: Editions P.-M. Favre, 1983, 493 p.
- Heer, Jean, Nestlé: 125 Years, 1866-1991, Vevey, Switzerland: Nestlé, 1991.
- ------, World Events, 1866-1966: The First Hundred Years of Nestlé, Vevey, Switzerland: Nestlé, 1966.
- Interagency Group on Breastfeeding Monitoring, Cracking the Code, UK Committee for UNICEF, 1997.
- Maucher, Helmut, Leadership in Action: Tough-Minded Strategies from the Global Giant, New York: McGraw-Hill, 1994, 160 p.
- Mudd, Tom, "Nestlé Plays to Global Audience," Industry Week, August 13, 2001, p. 34.
- "Nestlé Closes $2.8 Billion Dreyer's Deal After Clearing Final Hurdle with FTC," Quick Frozen Foods International, July 2003, p. 10.
- "Nestlé Consolidating Its Chocolate Production," New York Times, February 5, 1993.
- Oram, Roderick, "Nestlé's Portfolio of Possibilities," Financial Times, August 8, 1996, p. 24.
- ------, "Sweet Success for a Strong Leader," Financial Times, September 19, 1995, p. 53.
- Pink, Robert "Richenberger Keeps Nestle on Straight and Narrow," Corporate Finance, May 2004, p. 18.
- Rapoport, Carla, "Nestlé's Brand Building Machine," Fortune, September 19, 1994, pp. 147-48, 150, 154, 156.
- Richards, Louise, "Repackaging of Nestle Cannot Hide Realities," Financial Times, February 25, 2005, p. 12.
- Rohwedder, Cacilie, "Nestlé Goes on Investment Diet, Limiting Its Expansion: Emphasis Shifts to Strengthening Core Food Products in European Market," Wall Street Journal, September 27, 1994, p. B6.
- Steinmetz, Greg, and Tara Parker-Pope, "All Over the Map: At a Time When Companies Are Scrambling to Go Abroad, Nestlé Has Long Been There," Wall Street Journal, September 26, 1996, p. R4.
- Szabo, Andras, "Nestlé Posts Increased Revenue, Plans Investments," Europe Intelligence Wire, March 28, 2005, p. 32.
- Templeman, John, Stewart Toy, and Dave Lindorff, "Nestlé: A Giant in a Hurry," Business Week, March 22, 1993, pp. 50-51, 54.
- Thompson, Stephanie, "Nestlé Warns Stores: Prove It or Lose It," Advertising Age, September 13, 2004, p. 1.
- Urry, Maggie, and William Hall, "Nestlé Buys Spillers for £715m," Financial Times, February 5, 1998, p. 21.
Source: International Directory of Company Histories, Vol. 71. St. James Press, 2005.
