Nestlé in Japan winning in the new reality
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Transcript of Nestlé in Japan winning in the new reality
Nestlé in Japan:
Winning in the
New Reality
Kohzoh Takaoka President and CEO
Nestlé Japan
Nestlé Investor Seminar, Shanghai
September 25th, 2012
Agenda
1. Introducing Nestlé Japan
2. Winning in The New Reality
3. Performance
1 September 25th, 2012 Nestlé Investor Seminar, Shanghai
58%
11%
4%
1%
10%
14%
2%
Powdered and Liquid Beverages
Confectionery
Milk products
Prepared dished and cooking aids
PetCare
Nestlé Professional / Nestlé Health Science / Nespresso
Nestlé Waters
2
Sales by category of Nestle in Japan 2011
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Japan 9%
2011
3
Sales Contribution in total AOA
September 25th, 2012 Nestlé Investor Seminar, Shanghai
4
Japan Overview
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Population (2011) : 128 million 23% ≧65 yrs old
Population (2050 Proj.) : 97 million 39% ≧65 yrs old
No. of Households (2011) : 52 million 32% “1 Person”
GDP (2011) : 508 trillion yen
GDP / Capita (2011) : 4.0 million yen
Unemployment (2011) : 4.6%
Life Expectancy (2010) : 85.9 years (Female)
79.3 years (Male) Main Area Populations
Kanto 43.5 million
Kansai 20.9 million
5 September 25th, 2012 Nestlé Investor Seminar, Shanghai
GDP
508 Trillion yen
Living
Expenditure
58%
F&B 14%
Data: Real GDP (expenditure basis) in 2011
Out of home
32 Trillion yen
In home
40Trillion yen
Japan‟s Food and Beverage Market
6
The New Reality – Challenges No More Overall Growth / Saturated Market
September 25th, 2012 Nestlé Investor Seminar, Shanghai
-10%
-5%
0%
5%
10%
15%
100
105
110
115
120
125
130
1980 1990 2000 2010
Sources: National Institute of Population and Social Security Research; UN; IMF
Population (M) GDP Growth Today Population
GDP Growth
Declining population &
limited GDP growth
7
The New Reality – Challenges & Opportunities: Ageing Population
September 25th, 2012 Nestlé Investor Seminar, Shanghai
0
5
10
15
20
25
30
1970 1980 1990 2000 2010 2020 2030 Sources: UN (Estimated with: Developing countries-high variant / Developed countries-Low variant)
% of elderly (≥65y.o.)
The elderly trend in Japan
Japan
UK
US
China
India
Russia
Brazil
Germany
France
% of elderly by countries
in 2010
Italy
13
Developed
Countries
Developing
Countries
23%
17
20
23
8 7 5
29%
32%
September 25th, 2012 8 Nestlé Investor Seminar, Shanghai
7.1 9.4 12.9 15.9 6.0 8.4
11.7 13.8
6.5 7.4
8.8 9.4
9.1 8.8
7.9 7.6
7.2 6.8
5.4 4.2
35.8 40.7
46.8 50.9
1980 1990 2000 2010
3.22 2.99 2.67 2.46
The New Reality – Challenges & Opportunities: Changing Household Profiles
(# persons)
# Household (million)
Family Size (Av # persons)
37%
58%
1
2
3
4
5+
(31%)
(27%)
(19%)
(15%)
(8%)
(28%)
(25%)
(17%)
(12%)
(23%)
(21%)
(18%)
(22%)
(17%)
(20%)
(17%)
(18%)
(25%)
(20%)
(19%)
September 25th, 2012 9 Nestlé Investor Seminar, Shanghai
The New Reality – Challenges & Opportunities: Consumers Demand a lot of New Products
Sources: 1)ASD 2)Intage SRI
1) 2011 for Canned Liquid Coffee
2) 2011 for Chocolate
Beverage1) Chocolate2)
New
Existing
42% 39%
Total 3,430 273
Very large # of SKUs:
~40% of SKUs are replaced every year
116
157
1,348
2,082
98% of them are
gone
one year after the
launch
September 25th, 2012 10 Nestlé Investor Seminar, Shanghai
The New Reality – Challenges & Opportunities: Consumers shopping smarter & looking for lower prices
Sources: METI; Fuji Keizai
68 74
% of Consumer who buy Private Brands
2008 2009
+9%
11
89 Multi-store Shoppers
Single Store Shoppers
Consumer shopping style (% of Shoppers)
100 Total (%)
2009
September 25th, 2012 11 Nestlé Investor Seminar, Shanghai
The New Reality – Challenges & Opportunities: From Traditional to Digital in Consumer Communication
Traditional Media
0
10
20
30
40
50
60
70
2006 2007 2008 2009 2010
Digital Media
0
10
20
30
40
50
60
70
2006 2007 2008 2009 2010
Watch TVCM usually
Listen Radio CM usually
Read Newspaper Ad usually
Read Magazine Ad usually
Collect necessary information
from Web usually
Ever clicked Banner Ad on Web
Watch Web Ad usually
Read Mail Ad usually
Source : Hakuhodo HABIT2011
Declining access trend Growing access trend (%) (%)
September 25th, 2012 12 Nestlé Investor Seminar, Shanghai
The New Reality – Challenges & Opportunities: Channel Structure Change
0
50
100
150
200
1999 2005 2010
Index (1999 = 100)
Department store
Supermarket
Convenience store
E- commerce
3,168
Drug store
101
67
127
181
Traditional channel
Alternative channel
Source: METI / Fuji keizai
September 25th, 2012 13 Nestlé Investor Seminar, Shanghai
The New Reality – Challenges & Opportunities: Complex Traditional Trade Still a Reality
AEONTOP VALUE
AEON GLOBALMERCHANDING
AEON GLOBALSCM
MARUHISA DAIEI MARUETSU
TOBU STORE LAWSON
AEON
OK
FAMILY MART
UNY
SEICO MART
MAMMY MART
SUMMITSEVEN&I HOLDINGS
ITO-YOKADO
SEVEN ELEVEN JAPAN
LIFE CORP.
SUPERDAIEI
FINE LIFE
SAKE OROSHI
UNION<SOU>
JAPAN
INFOREX
ALLIANCE
NETWORK
ITOCHU FOODS
NIPPOON
ACCESS
KOKUBUMITSUBISHI
SHOKUHIN
ASAHI FOODS
KATO SANGYO
NIHONBASHI
KABO
YAMABOSHIYA
MARUICHI
SANSHO
NACS
NAKAMURA
ALBIS
MITSUI FOODS
TOHKANSANESU
SATOH
KANAKAN
MARUDAIHORIUCHI
KUZE
FOOD SERVICENETWORK
YAMAEHISANO
KAGOSHIMA
SEICOFRESH FOODS
SHOWA
UNIVERSALFOOD
DOLCE
KONFEX
NIHON SHURUIHANBAI
FUJITOKUBUSSAN
NAGANOKENSHURUIHANBAI
TAKEDAFOODS
3.61%1.56%
28.41%
15%
15%
30.01% 4.8%
20% 80%
2.3%
About 10billion Yen
32.4%
1.53%
15%
19.53%
3.2%
28.79
%
83.5%
85%
85%
85%
60.6%
0.2%
100%1.96%
6.66%
6.66%
5.05%
91.9%
6.66%
4.2
5%
2%
2.14%
2.22%
31.58%
51.7%
34%1.83%
8.26%
11.1%
8.57%
4.69%
2.3%
1.5%
5.0
7%
100%
98%
51%
SUMITOMO
ITOCHU
MITSUBISHI
MARUBENI
HASEGAWA
14.7%
TOHO
SHUREN
KOKUBU
KANSAI SUPER
5%
73.8%
0.39%
MAXVALUE
CHUBU
JOIS2.2%
1.82%
3%
26.3%
AEON
HOKKAIDO
2.08%
3.55%
IZUMIYA
3%
4.71%
YUASA
FUNASHOKU
2%
MITSUI
BUSSAN
Investment Rate
Shosha
Wholesaler
Retailer
September 25th, 2012 14 Nestlé Investor Seminar, Shanghai
Challenges & Opportunities in The New Reality
Declining total population, increasing single households and
elderly population
Increasing polarization of wealth and consumption
High demands for quality, innovation, freshness and customization
High "nutrition awareness"
Highly developed alternative communication
Shifting from traditional channels to emerging new channels
Highly complex traditional trade still a reality
Agenda
1. Introducing Zone AOA
2. Winning in The New Reality
3. Performance
15 September 25th, 2012 Nestlé Investor Seminar, Shanghai
16
The Nestlé Strategic Roadmap to Win in The New Reality
September 25th, 2012 Nestlé Investor Seminar, Shanghai
17
Strategic Enablers to Achieve Nestlé-in-Japan Mission
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Bigger
Bolder
Better
(B3)
I &R
Nestlé
Continuous
Excellence
B to C / Direct Model
From Mass Ad
to P2P
18
NESCAFÉ Barista enjoys great popularity
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Now the Best selling coffee machine in Japan
Launched in March 2010,
„Drink instant coffee machine style‟ is catching on.
5 kinds of café
menu with one
button
Machine price
reasonable
Enjoy a cup of Café
Latte for 25 yen !
B3 Innovation
10% of machine
purchasers are
R&G coffee
drinkers
19
NESCAFÉ Dolce Gusto Creating new segment in coffee machine market
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Enjoy fresh taste & aroma and varieties anytime using capsule for
„NESCAFÉ Dolce Gusto‟, completely new and different from traditional
electric coffee maker.
B3 Innovation
20
Kit Kat “Sweetness for Adults” Reinforces Kit Kat brand
September 25th, 2012 Nestlé Investor Seminar, Shanghai
• Differentiated brand image from original Kit Kat
• Gained market share.
⇒Real 2nd pillar to the brand!
Crushed dark biscuits mixed
into chocolate mass
・Unique texture
・Enhanced lightness
・Less sweet
B3 Innovation
21
Move to Digital accelerates Owned/Earned Media Value
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Mass Ad
to P2P
2001 2011 2011
22
KIT KAT strengthens brand value by PR exposure 5 times more PR exposure than TV every year
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Campaign born from consumers‟ word-of-mouth
KIT KAT sounds like Kyushu‟s dialect „Kitto Kattoh (Surely win !)‟ and has become a lucky charm for Juken among
students since around 2002.
Sending message through „third party‟ makes the news more public and sympathetic
Students bring it to test room, or teachers, family, or friends send it to students to cheer them up
„KIT KAT Juken Campaign
KIT KAT X Japan Post KIT KAT X Japan Railway
Mass Ad
to P2P
Investment Exposure
x 9.6
2011
23
Our PR activities are on the right track
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Brand PR Investment vs. Exposure
Mass Ad
to P2P
24
Nestlé Consumer Site contains E-commerce, Brand communication,
Membership programme, Entertainment for wider access and CRM
September 25th, 2012 Nestlé Investor Seminar, Shanghai
Registered members: 2.5 million (as of the end of July, 2012)
The number of page views: 270 million (2011 in total)
Entertainment contents
Online shopping
Brand contents nestle.jp
25
Channel Development
Established Direct Selling as growth driver
September 25th, 2012 Nestlé Investor Seminar, Shanghai
‟Nestlé On-line shopping‟
Direct Model
26
NESCAFÉ Barista Innovations beyond products
September 25th, 2012 Nestlé Investor Seminar, Shanghai
New Innovative business model exploration - NESCAFÉ BARISTA office
Unique opportunity : 5.3m small offices
New business model idea:
• Installation of free NESCAFÉ BARISTA machine
• NESCAFÉ ambassadors engagement
• Direct sales of coffee
Test sales (Jun.-Jul. 2012) successfully done
in Hokkaido region
Exploring national roll out.
TV infomercial
Direct Model
Evolution of Nestlé Health Science in Japan
Current Businesses
Ageing Care
Critical Care
Paediatric
Future Opportunities
Metabolic Health
Gastrointestinal
Brain Health
27 September 25th, 2012 Nestlé Investor Seminar, Shanghai
100
111
120
2009 2010 2011
Sales (2009 = 100) Market Share
Agenda
1. Introducing Zone AOA
2. Winning in The New Reality
3. Performance
28 September 25th, 2012 Nestlé Investor Seminar, Shanghai
September 25th, 2012 29 Nestlé Investor Seminar, Shanghai
100
85 91
2003 2007 2011
Organic Sales Index (Year 2003 = 100)
Return to Sales Growth Nestlé in Japan
September 25th, 2012 30 Nestlé Investor Seminar, Shanghai
2007 2008 2009 2010 2011 2012 H1
TNWC as % of sales
Acceleration of Working Capital Improvement Nestlé in Japan
Winning in the New Reality in Japan
Unfavorable demographic trends – shrinking and ageing population
Consumers becoming more demanding and value conscious
Traditional Media giving way to Digital Media
Sales channel structure evolving from “Traditional” to “Alternative”
Complex and expensive trade structure still remains relevant
Return to Sales Growth Accelerated Profit Margin improvement
Increased Capital Efficiency
With emphasis on:
B3 innovations
Direct business model
From Mass Ad to P2P communication
Nestle Continuous Excellence
31 September 25th, 2012 Nestlé Investor Seminar, Shanghai
The New Reality Nestlé Japan‟s Response
September 25th, 2012 32 Nestlé Investor Seminar, Shanghai
Thank you!
September 25th, 2012 33 Nestlé Investor Seminar, Shanghai
Q & A