Nestle, one of the largest food and beverage companies globally, faces significant challenges in the Chinese market specifically in its dairy business. According to Nestle Greater China Senior Vice President and Dairy Business Executive Officer Rebecca Wang, two major hurdles exist. Firstly, despite dairy being present in 99% of Chinese households, Nestle’s market penetration is only at 8%, mainly in the form of milk powder for adults. Secondly, Nestle is a well-known brand, but consumer awareness of its dairy products is limited compared to its coffee offerings.
In a market already dominated by domestic leaders like Yili and Mengniu, Nestle recognizes the difficulty of increasing its market share. However, Wang believes that this is not impossible. She emphasizes the need to leverage Nestle’s strengths to entice consumers to choose their dairy products. With over a century of existence, Nestle boasts Swiss quality, a strong nutritional foundation, and a range of products backed by clinical trials.
Rather than creating new and unfamiliar products, Nestle focuses on utilizing its existing core capabilities to cater to Chinese consumers. This approach involves integrating dairy with other Nestle products such as Milo and China’s Whole Milk brand. Additionally, Nestle has introduced probiotic-enriched dairy products, which have received positive feedback from consumers.
Being a 150-year-old brand, Nestle benefits from a level of consumer acceptance and recognition that it aims to leverage to boost sales and market penetration. Wang acknowledges that China’s dairy industry has faced criticism and concerns regarding food safety. Thus, ensuring quality and safety in dairy products becomes even more crucial. Nestle’s long-standing presence in the market demonstrates to consumers that they can trust the brand.
To foster trust and confidence, Nestle highlights its historical ties to dairy products, dating back to its founding in 1867. Nestle revitalizes this story by incorporating modern elements such as depicting wide open green plains and utilizing traditional logos with contemporary communication methods.
Recognizing the growing demand for plant-based options, Nestle also sees the opportunity to expand its dairy business through plant-based ingredients like peas, soy, and oats. These ingredients, like conventional dairy, provide good sources of protein. Nestle has responded by launching soy milk powders, probiotic products, oat milk products, and more, once again relying on its core capabilities and existing resources to foster further growth and development.
In summary, Nestle acknowledges the challenges it faces in the Chinese market when it comes to its dairy business. By capitalizing on its strengths, emphasizing quality and safety, and exploring plant-based options, Nestle aims to overcome these challenges and increase its market presence.