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How Nestle reacts to the events on Baby food market in China

Nestle Group, headquartered in Switzerland, is a food manufacturer with a long history in China. Nestle company, originally started with the production of baby food, and then kept as well further developed this business all over the world. Now, Nestle Group has become the world’s largest food company, providing a variety of products for consumers with different lifestyles, at different stages of life or cultural background. It has been seeking to offer nutrition and health, and to bring high-quality food as well as a better life for all its consumers.

Main Brands and Products of Baby Food owned by Nestle in China

Nestle has made quite a lot of acquisition of other baby nutrition companies so as to ensure its dominance in the global baby nutrition market. The most well-known ones include Wyeth and Gerber. It is also said by some critics that Nestle’s world food empire is established by acquisition.

Wyeth, one of the global top 500 enterprises, was founded in 1926 and headquartered in Collegeville, Pennsylvania, USA. Wyeth is the world’s largest research-based pharmaceutical and health care products companies, having a leading advantage in prescription pharmaceuticals, non-prescription health care products and nutritional fields. Nestle acquired Wyeth in April, 2012.

Gerber, from America, having over 80 years of professional experience, is a brand who has withstood the test of time and people. Its raw materials are from global high-quality farms whose soil has passed strict safety tests, and ensured no harmful pesticide residues. Gerber was acquired with 5.5 billion U.S. dollars by Nestle in 2007.

Recent trouble in Brand image

Recently, some of Nestle’s milk powder was “downsizing”, with the prices remaining the same. Hence a great number of consumers questioned Nestle milk powder “disguised price rise”.

Nestle China official responded by claiming “Nestle downsized in order to put a spoon in the milk powder box to facilitate the consumers.” To justify the cost, the direction added: “The improved milk powder craft and quality had their corresponding cost.”

However, facing the situation of imported milk powder price rises and regarding to the quality and safety perceived of Nestle’s products, we can expect to not see any true consequence on Nestle’s performance. Finally, in order to compete with other international Brands, Nestle announced willing to slighlty reduce its price.

What is the influence of recent year incident for Nestle in China

Before the event of excessive iodine, the company’s performance was very good, especially the middle and low level products. At that time Nestle was one of the most Cost-effective domestic milk powder brands. This scandal could impact this leading position in China. Therefore, Nestle develop relevant product and communication strategy to gain advantage of this situation in the customer’s mind.

Nestle milk powder technology and R & D technology are of great advantage. Nestle promised to not use any genetically modified ingredients in their products in Europe, not in Asia. Nestle now mainly produces in Heilongjiang. Though the company uses domestic milk source, its production management is very stringent hence many consumers still find it trustworthy.

Amy Wang