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NESTL NESVITA Cereal Milk Drink

By Ma. Cristina Villanueva


INTRODUCTION
In 1994, NESTL launched the first of its kind instant cereal beverage under the b
rand NESVITA
in the Philippines. This was the first product launched by NESTL under the NESVIT
A brand name.
NESTL NESVITA Cereal Milk Drink truly was a revolutionary product back then since
it was harping
towards the benefits of convenience and healthy nutrition.
Since 1994 until the late 90 s, NESTL NESVITA Cereal Milk Drink was the only instan
t cereal
beverage in the market. The NESVITA brand name has been synonymous already with
instant cereal
beverage similar to that of Coca-Cola (or Coke) to soft drinks. However in recen
t years, other
manufacturers started to challenge NESVITA Cereal Milk Drink, low-priced brands
targeted to different
age groups as well as different Socio Economic Class (SEC) of the market.
One of the biggest threats of the product, PT Kakao s Energen, has been gaining a
lot of
momentum in terms of market share due to its positioning as well as pricing. The
product was initially
distributed to sari-sari stores, market stalls as well as small groceries in Vis
ayas and Mindanao but is
now slowly being introduced to the supermarkets, groceries, conveniences stores
as well, channels
wherein NESVITA Cereal Milk Drink is currently present1.
NESTL recognized the emerging threat of Energen to its NESVITA business but also
realized that
NESVITA may not be the right brand to challenge Energen due to its positioning a
nd pricing strategy.
This was the reason why in March 2008, NESTL launched a low-priced cereal beverag
e under the mega
brand BEAR BRAND called Busog Lusog Cereal Drink which is targeted to lower SEC s
as well as the
whole family.
The entry of BEAR BRAND Busog Lusog Cereal Drink proved to be a great strategy i
n challenging
Energen in the bottom of the pyramid consumers since it was distributed in chann
els where Energen is.
The primarily role of the brand is to shift current Energen users to BEAR BRAND
Busog Lusog and attract
new users into the category. In the first 6 months of the launch of BEAR BRAND,
it has been able to grab
share from Energen but it has also cannibalized a portion of NESVITA Cereal Milk
Drink s market share.
Since NESVITA Cereal Milk Drink is the biggest contributor and profit driver for
the total NESVITA
business, the challenge that the NESTL Management posed to the NESVITA team is ho
w it can grow the

business further without changing its positioning as a


nd targeted mainly
to Filipino adults who are into a healthy lifestyle.

premium

cereal beverage bra

1 * Energen has the same distributor as Kopiko (which is an emerging player in t


he pure soluble coffee category)

THE COMPANY
NESTL Worldwide
NESTL was founded in 1866 by Henri NESTL, a Swiss pharmacist who developed a food
for
babies who were unable to breastfeed. His first success was a premature infant w
ho could not tolerate
his mother's milk or any of the usual substitutes. NESTL's new formula saved the
child's life. People
quickly recognized the value of this new product, and soon after, it was being s
old in much of Europe.
Today, NESTL is the world's leading nutrition, health and wellness company. It is
the biggest food
company in the world with sales of CHF 107.6 billion in 2007, and net profit of
CHF 10.6 billion. It has
factories and operations in almost every country in the world.
NESTL in the Philippines
Although NESTL products were already available in the Philippines as far back as
1895, it was
not until 1911 that the NESTL and Anglo Swiss Condensed Milk Company was establis
hed in the
country, with its first sales office in Binondo, Manila. The Company was forced
to suspend its operations
during World War II, but soon made a comeback after Liberation, under a new name
: Filipro, Inc. In
1960, NESTL S.A. and San Miguel Corporation entered into a partnership resulting
in the formation of
Nutritional Products, Inc. (Nutripro). In 1962, Nutripro s first factory started o
perations in Alabang,
Muntinlupa to manufacture NESCAFE. Through the years, other manufacturing facili
ties were
established in Cabuyao, Cagayan de Oro, Lipa, Quezon City, and Marikina to meet
the growing demand
for NESTL products in the country. In 1977, Filipro, Inc., the trading company, a
nd Nutripro Inc., the
manufacturing company, merged under the name Filipro, Inc. In 1986, Filipro, Inc
. changed to its
present name as NESTL Philippines, Inc. In 1991, NESTL pioneered food production a
nd distribution in
the AIJV (ASEAN Industrial Joint Venture), a regional trade complementation prog
ram. The Company
participated in this program with the manufacture of breakfast cereals at the NE
STL Lipa Factory2, for
export to the ASEAN markets. In late 1998, NPI became a wholly owned subsidiary
of NESTL S.A.,
following the latter s purchase and acquisition of San Miguel Corporation s entire e
quity shareholding in
the company.
Today, NESTL Philippines, Inc. (NPI) is a robust and stable organization, proud o
f its role in
bringing the best food throughout the stages of the Filipino consumers lives. The
company employs
about 3,400 men and women all over the country. It is now among the top companie
s in the entire
NESTL world. NESTL produces and markets products under some of the country s well kn

own brands
such as NESCAFE, NIDO, MILO, NESTEA, MAGGI, COFFEE-MATE, BEAR BRAND, NESVITA, am
ong others.
Its product range has expanded to include coffee, milk, infant nutrition, infant
food, beverages, nondairy
creamer, food, ice cream and chilled dairy, breakfast cereals, confectionery and
pet care. Over
time, NESTL s quality and affordable products have become strong brands, number 1 o
r number 2 in
their various categories, and a part of the Filipino way of life.
2 Today, the Lipa Factory is the NESTL Group s ASEAN Supply Center for breakfast ce
reals.

The NESVITA Brand


Adult Nutrition is expected to grow dramatically in the coming years due to an i
ncrease in
awareness of the benefits of healthy living and healthy eating. In fact, the inc
reasing costs of health care
and the key roles that governments play in promoting self-health maintenance fur
ther contribute to
supporting these trends. NESTL has identified this opportunity for new consumer n
eeds, as have other
competitive food companies. However, NESTL s extensive experience in nutrition as w
ell as its best-inclass
R&D expertise provides it a significant advantage over competition. Beyond the b
usiness
opportunity, NESTL sees this dairy and cereal-based Adult Health and Wellness Sol
utions as key pillars
in the strategic task of emerging as the trusted and most preferred Food and Bev
erage, Nutrition, Health
and Wellness company in the world. The importance of this initiative required a
global and focused
approach to seize this significant opportunity. Therefore, the starting point wa
s to create a Mega brand.
This is why NESVITA has been chosen as one of the leading international brand na
mes for dairy and
cereal-based products which offer specific health benefits for adults.
NESVITA as a name can be interpreted as VITA for Life and Vitality in Latin, and
in English for
Vital and Vitality, and can be easily associated with NESTL. Hence, a good brand
name potential to be
built as a strong NESTL brand for a range of cross category products focusing on
nutrition, health and
wellness.
NESVITA was first launched in 1991 in Taiwan as an instant cereal beverage in si
ngle serve
sachets to enter the rapidly expanding cereal beverage market. Changing eating h
abits, as well as the
trend towards convenience and healthy nutrition, have driven the subsequent laun
ches of NESVITA
cereal beverage into China, Hong Kong, Thailand and Philippines in 1994.
In general, the good taste and good nutritional image of the NESVITA cereal beve
rage are the
generally perceived values of the brand. It has been recognized that this basic
brand equity allowed for
the brand to be expanded firstly into different nutritional propositions, then m
ore recently into different
product formats such as cereal bars, adult milk, and yogurt.
In the Philippines, NESVITA the brand was first introduced commercially via the
NESVITA Cereal
Milk Drink product in 1994. At its launch it was seen mainly as a product for br
eakfast and an additional
fiber supplement. Around 2004 to 2006 the Carnation Powdered Milk brands were tr
ansitioned under
the NESVITA brand as NESVITA Pro-Bone Protection and NESVITA Pro-Weight Manageme
nt. It was also
around this time where introduction of other specialized milks such as NESVITA P

ro-Heart and NESVITA


Pro-Digestion were launched. What used to be NESTL 0% Yogurt Drinks and Cups were
also adapted
into the NESVITA Pro-Weight Management brand. NESVITA is now considered a MEGA B
RAND in
NESTL Standards! (See Appendix 1 in page 12 for listing of all NESVITA products c
urrently sold in the
Philippines)

THE MARKET
Healthy lifestyle trend among adults
Living in a fast-paced environment, people seldom have time to take care of them
selves because
of the numerous and sometimes monotonous tasks that has to be accomplished daily.
These are just
some of the reasons why various diseases are very prevalent among adults such as
heart disease,
obesity, osteoporosis, tuberculosis, and the like. When a person reaches the age
of 30 years old, a
biological condition called somatopause occurs. This is simply a decline in overal
l body performance
characterized by slower metabolism, lower recovery, decreased mobility, shorter
endurance, reduced
mental alertness and shorter memory.
People in general want to enjoy their life to the fullest. To enjoy life, one ha
s to take care of
his/her body. There is NO quick solution to living a healthy life. It takes a lo
t of effort and commitment
in order to live a healthy lifestyle. Nowadays, there is a growing trend on heal
thy living amongst adults.
It can be in terms of eating the right food (high fiber, low calorie, no saturat
ed fat, etc.) as well as
engaging in physical activities (gym, running/jogging, sports, etc.).
Because of this emerging trend there are a lot of food brands, specifically beve
rages focusing on
adult, health & wellness such as Del Monte, Lipton, NESVITA, Anlene, C2 , and ma
ny more. Even
traditionally unhealthy brands such as Coke (i.e. Coke Light and Coke Zero) and Pe
psi (i.e. Pepsi Max)
have added healthier alternatives to their regular portfolio. Below are some of th
e brands under each
of the beverages that promote health and wellness:
o
Softdrinks & Juices
Coke Light, Coke Zero, Del Monte Fit & Right, C2 Lite, FAB,
etc.
o
Milk & Yoghurt Non-fat Milk such as NESVITA Pro-Weight and Anlene, NESTL Low Fat
Fresh Milk, NESTL Yoghurt
o
Tea Lipton Green Tea, Imported Green Tea variants
o
Coffee Nescafe sugar free, Nescafe FIT (Teavigo)
o
Cereal Beverages
NESVITA Cereal Milk Drink, Energen, Quaker Q-Vital, BEAR BRAND
Busog Lusog
Total market for healthy beverages for adults, is approximately worth Php 44.5 b
illion.
Market Segment
NESVITA Cereal Milk Drink belongs to the Breakfast Cereals Category based on Nie
lsen s definition. This
category is further divided into three segments namely ready-to-eat cereals, all

-in-one cereals and hot


cereals.(See Exhibit 1 for the Breakfast Cereal Category and its segments)

EXHIBIT 1: THE BREAKFAST CEREAL CATEGORY AND ITS


TOTAL BREAKFAST
CEREALS CATEGORYReady-to-Eat
cerealsHOT
cereals
Primarily designed to be
consumed w/ milk
Instant Cereal
Beverage
Needs to be cooked
(Quick Cooking) / InstantAll-in-one
cerealsTHEBREAKFASTCEREALSCATEGORY
The Ready-to-Eat Cereals segment or popularly known as Breakfast Cereals are cer
eal based
ready to eat products made of wheat, corn, rice, oats and are primarily designed
to be consumed with
cold milk (either powdered or ready to drink). The pioneer in this segment is th
e Kellogg Company
which came out with the first ready to eat cornflakes back in 1906.
Sub-segments and Players:
Kids -NESTL Koko Krunch, Kellogg s Frosties, Oishi Choco Flakes, etc.
Family

NESTL Corn Flakes, Kellogg s Corn Flakes, etc.

Adults

NESTL Fitnesse, Kellogg s Special K, Post Banana Nut Crunch

The Hot Cereals segment is primarily what we know as oats/oatmeal. The pioneer o
f this
segment is the Quaker Oats Company which came out with the first oatmeal product
back in 1901.
Primarily consumed for breakfast and is known to be good in lowering cholesterol
(soluble fiber content
in oats).
Sub-segments and Players:
Family

Quaker Oats, Golden Oats, Australia Harvest, NESVITA Oatmeal

Unlike the ready-to-eat cereals, oatmeal is still generally known as an all-fami


ly product being
passed down from generations to generations although recently there have been a
lot of innovations in
the category such as instant oatmeal (just add hot water) and flavored oatmeal (
chocolate, banana, etc.)
and fortified oatmeal (added vitamins & minerals)

The All-in-One Cereals segment is composed of instant cereal beverages that are
made of
cereals (i.e. wheat, corn, oats, etc.). Most of the brands like NESVITA Cereal M
ilk Drink can be
consumed either hot or cold. They are primarily consumed during breakfast as par
t of a meal or by
itself ( pantawid gutom ). NESVITA Cereal Milk Drink was the pioneer in this segment
when it was
launched back in 1994. It was the only brand in the segment until the early 2000
when competition like
Quaker s Q-Vital and Energen came into the picture.
Sub-segments and Players:
Kids
Adults

BEAR BRAND Busog Lusog, Nutrivim


NESVITA Cereal Milk Drink, Quaker s Q-Vital and Energen

Market Size
The Total Breakfast Cereals category is worth Php 2.1 Bio per year. In terms of
value (Php), the
Ready-to-Eat segment is the biggest contributor at 46% followed by Hot cereals a
t 39% and All-in-One
segment at 15%. The category as a whole is growing but it is the Hot Cereals seg
ment that continues to
grow faster than the category at 18%. (See Exhibit 2 for the Market Size and Gro
wth for each segment
of the category)
EXHIBIT 2: MARKET SIZE & GROWTH PER SEGMENT OF THE BREAKFAST CEREALS CATEGORY
Value Volume
Segment Value % Cont %Growth Volume % Cont % Growth
Ready-to-Eat 973 M 46% 6% 2,500 mt 26% 4%
All-in-One 308 M 15% 1% 871 mt 9% 4%
Hot Cereals 831 M 39% 18% 6,183 mt 65% 9%
Total Category 2.1 B 100% 10% 9,555 mt 100% 7%
Based on: 2008 MAT TY May Nielsen RTA
In terms of volume, the Total Breakfast Cereals category is about 10,000 Metric
Ton category
per year. The Hot cereals segment is the biggest contributor at 65% followed by
Ready-to-Eat segment
at 26% and All-in-One segment at 9%. The category as a whole is growing but it i
s the hot cereals
segment that continues to grow faster than the category at 9%.
Household Penetration by Segment
Based on AC Nielsen s Retail Audit report as of May 2008 in a base of 14.5 mio hou
seholds3, the Hot
Cereal segment has a penetration of 22%, the Ready-to-Eat segment has a penetrat
ion of 18% and the
All-in-One segment has the lowest penetration at 11%. This shows that there is s
till a lot of opportunity
for penetration for the total breakfast cereals category and in each of its segm
ents. The highest

opportunity for penetration can be found in the All-in-One segment.


3 average of 5 members per household

The All-in-One Market Segment & Its Key Players


The All-in-One Segment has 3 key players --NESVITA Cereal Milk Drink, Energen, a
nd Quaker QVital. A new entrant has been launched last May 2008 which is the BEAR BRAND Bus
og Lusog. NESVITA
Cereal Milk Drink is the most expensive at around Php12.7, followed by Quaker QVital at Php 11.4,
while Energen is priced lower at Php 5.9 and BEAR BRAND Busog Lusog priced lowes
t at around Php 5.6.
Customer profile of each player can be seen below:
NESVITA CEREAL MILK DRINK
.
usage spans social status
.
Females
.
cuts across age
.
more working than non-working
QUAKER Q-VITAL
.
slightly skews towards Class C
.
appeals to both genders
.
cuts across age and working status
ENERGEN
.
middle class
.
predominantly females
.
31-40 years old
BEAR BRAND BUSOG LUSOG
.
lower class
.
Kids
NESVITA Cereal Milk Drink is not only the market leader in the segment, at 55% i
n terms of
volume and 69% in terms of value but is the pioneer in this segment when it was
launched back in 1994.
The closest competitor is Energen which is about 29% of the market. Followed by
Quaker Q-Vital at 8%
and BEAR BRAND Busog Lusog at 3%. (See Exhibit 3 for Market Share of each player
)
EXHIBIT 3: MARKET SHARE OF PLAYERS IN THE ALL-IN-ONE SEGMENT
MARKET SHARE VALUE VOLUME
NESVITA Cereal Milk Drink 69% 55%
Energen 16% 29%
Quaker Q-Vital 9% 8%
BEAR BRAND Busog Lusog 3% 3%

Based on: 2008 MAT TY May Nielsen RTA


NESVITA CEREAL MILK DRINK
Product description
NESVITA Cereal Milk Drink is an instant cereal beverage made of wheat, milk and
vitamins. It s
primary benefit is it s fiber content which helps smoothen the digestion as well a
s the natural goodness
of milk (calcium) and vitamins (A, E & C).
NESVITA Cereal Milk Drink is primarily consumed during breakfast as part of a me
al or by itself
( pantawid gutom ) since this beverage is filling due its cereals flakes & rice crispi
es content. There

are also snacking occasions for the brand since it is considered a healthier alter
native to the usual
merienda fare such as pansit, chips, and the like. A serving of NESVITA Cereal M
ilk Drink is about 120
calories, only 6% of RENI of a 2000 calorie per day requirement for an adult.
NESVITA Cereal Milk Drink comes in single serve sachets of 30g. Available in thr
ee variants:
original (50% of the business), sweet corn (27%) and choco malt (23%).
Product Positioning
NESVITA Cereal Milk Drink is targeted to females aged 18-29 years old as the cer
eal beverage
which makes you feel beautiful inside (healthy digestion brought about by the fi
ber content and
complemented by the goodness of milk & vitamins) and out (a healthy digestion sh
ows outside as well)
Product Key Selling Points
.
Quality product made by NESTL, the most trusted food company in the world
.
Wholesome goodness in every serving: wheat, milk & vitamins for only Php 12.75
.
Available in three variants: original, sweet corn and choco malt
Product Packaging & Presentation
NESVITA Cereal Milk Drink is packed in single serve sachets. It can be bought pe
r piece for trial or by
boxes of 10 s or by 5 s. (See Apendix 2 in page 13 for Packaging of NESVITA Cereal M
ilk Drink)
.
NESVITA Cereal Milk Drink 30g single serve sachet
.
NESVITA Cereal Milk Drink: Box of 5 s and 10 s
Product Segmentation
NESVITA Cereal Milk Drink targets the ABC segment of the market as can be seen i
n the
household penetration of the product (See Exhibit 4 for Household Penetration of
NESVITA Cereal Milk
Drink). Its consumers are primarily females ages 18-29 years old, more working t
han non-working. These
are active people who engage in some form of physical activity or exercise. They
put a premium on
convenience but are not willing to sacrifice on either taste or nutrition.

EXHIBIT 4: HOUSEHOLD PENETRATION OF NESVITA CEREAL MILK DRINK


SEC.
# of HH.
HH.
Penetration.
NESVITA.
% Contribution.
AB.
200,817.00.
21%.
3%.
C.
2,217,204.00.
18%.
31%.
D.
9,214,569.00.
8%.
62%.
E.
6,055,092.00.
3%.
5%.
Product Usage
1..
Open the sachet of NESVITA Cereal Milk Drink
2..
Pour entire content to a mug or glass
3..
Add approximately 150ml of hot or cold water (depending on preference)
4..
Stir and enjoy!
Distribution

Availability and Visibility

NESVITA Cereal Milk Drink is available in all leading supermarkets, groceries, c


onvenience stores
and selected drugstores nationwide. It is not available in smaller trade channel
s such as market stalls &
sari-sari stores because it is not the right channel for the product due to its
premium price.
In the supermarkets & groceries, NESVITA Cereal Milk Drink is placed in the brea
kfast cereals
aisle/gondola together with Ready-to-Eat cereals and Hot Cereals. Being the mark
et leader in the All-InOne segment: NESVITA Cereal Milk Drink enjoys the biggest share of shelf space v
s. it s competitors
(60% of shelf share).
In the convenience stores and drugstores, it is situated near other single-serve

categories/products (i.e. coffee, tea, juice, oatmeal, etc.). It leverages on th


e NESTL distribution
network
o.
Direct Key Accounts
o.
Via Distributors
res

SM, Robinsons, Shopwise, Puregold, Mercury Drug


Regional Key Accounts, Groceries, Market Stalls & Sari-Sari Sto

Promotion
NESVITA Cereal Milk Drink is heavily promoted in TV, Print, PR, Website, Movie s
ponsorship,
Sampling, Events, and more importantly in-store merchandising via Actmedia or tr
aditional Point of
Purchase or Poinf of Sales materials. (See Appendix 3 in page 14 for current pro
motional materials of
NESVITA Cereal Milk Drink)

During it s early years, NESVITA Cereal Milk Drink was targeted to kids (tagline
N
ESVITA
breakfast you can drink) but eventually shifted to talking to adults since it wa
s found out that adults are
the one who consume the product more than kids due to it s healthy and convenient
offering (i.e. fiber).
Last year, NESVITA Cereal Milk Drink re-launched the brand by having the beautif
ul Marian
Rivera as their celebrity brand endorser, arguably, the hottest female celebrity
in the Philippines right
now. She was the perfect fit for NESVITA Cereal Milk Drink s latest campaign: Feel
Beautiful Inside &
Out.
*feel beautiful inside
*feel beautiful outside
well

via NESVITA = fiber, milk & vitamins


if you feel beautiful (good) inside, it shows outside as

The ad featured Marian Rivera in her natural self (not as celebrity, not as Mari
mar, or any of her
alter egos) and how she stays beautiful inside & out. One of the key points of t
he ad was that Marian
only says the word beautiful twice. Thus, truly highlighting how a person can feel
beautiful by taking
in a cup of NESVITA Cereal Milk Drink.
The campaign was also timed during the launch of her 2nd teleserye: Dyesebel to
maximize the
affinity with its chosen female celebrity. Thus, this campaign enabled the brand
to generate a lot of
awareness, consideration and trial. This was the first time that NESVITA Cereal
Milk Drink used a
celebrity endorser in its ad campaign.
Pricing
NESVITA Cereal Milk Drink is the most expensive brand in the segment. Its direct
competition
are Quaker s Q Vital and Oishi s Day to Day cereal drinks in terms of pricing. Low p
riced competition
primarily Energen is more than 50-55% cheaper vs. NESVITA
BRAND PRICE INDEX
NESVITA 12.7 100%
Q Vital 11.4 90%
Oishi Day to Day 9 71%
Nutrivim 6.6 52%
Energen 5.9 46%
BEAR BRAND Busog Lusog 5.6 44%

It is my belief that to combat Energen, NESTL decided to launch BEAR BRAND Busog
Lusog
which is currently the cheapest cereal beverage in the market. Also unlike NESVI
TA, BEAR BRAND Busog
Lusog is available in the market stalls and sari-sari stores which can fight hea
d on with Energen in terms
of distribution.
Substitutes
There are a lot of healthy beverages that are more established in the market suc
h as coffee, tea,
juices, chocolate beverages, mineral water, etc. The cereal beverages or cereal
drinks category is still a
very small segment but continues to grow. The main advantage still of this segme
nt is that it is filling
versus other healthy beverages or drinks.
THE CHALLENGE
NESVITA Cereal Milk Drink is the most established product in the current portfol
io of the NESVITA brand
here in the Philippines. This product drives approximately 50% of the business o
f total NESVITA.
A lot of players have started to challenge the product since its entry in 1994.
In fact some of them,
particularly Energen, has been gaining edge with NESVITA Cereal Milk Drink, via
its low-cost pricing and
extensive distribution.
Since NESVITA Cereal Milk Drink is but just one of the numerous products under t
he brand name
NESVITA, it cannot reposition itself without misaligning itself with the rest of
the product portfolio under
the NESVITA brand. This limits the product s options in a way to fight head on wit
h the more aggressive
players of the market, at least in terms of price and positioning.
Given this situation how then can the brand grow further without changing its po
sitioning as a
premium cereal beverage brand targeting mainly adults who are into a healthy lifes
tyle?