Nestle- World's Largest Food company
December 15, 2021 by Vandana S · 3 min read
Nestle, a Swiss multinational company started in the infant food market to fight malnourishment. They started selling packaged nutritious infant food- Cerelac which had grains, sugar, and milk as its key ingredients. Slowly they expanded to the coffee industry during world war 2. The company launched Nescafe and it became the favorite drink of the US military army. In India, there was a shift in the coffee drinking culture, and nestle launched Nescafe in India in the year 1963. It is the world’s largest food company in terms of revenue.
It has a key stake in the biggest cosmetic company in the world- Loreal. They hold a 23.29% stake. This was the first venture of Nestle outside the food industry. It has 447 manufacturing factories spread across 86 countries.
Nestle India has its headquarters in Gurgaon. It began in the year 1959 and was promoted by Nestle Alimentana S.A through its subsidiary, Nestle Holdings Ltd. Nestle, the parent company owns 62.76% of Nestle India, and the remaining 37.24% is owned by the general public, FII, and other investors. Its first production facility was set up in Moga, Punjab. It was mainly established for milk production and growth in that sector. Nestle launched multiple education programs for the farmers right from increasing the milk yield of their cows through improved dairy farming methods, to irrigation, scientific crop management practices, and helping with the procurement of bank loans.
Nestle setup milk collection centers that would not only ensure prompt collection and pay fair prices, but also instill amongst the community, confidence in the dairy business. Progress involved the creation of prosperity on an ongoing and sustainable basis that has resulted in not just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving hub of industrial activity, as well.
Following which 9 production facility was set up expanding throughout India. They contribute close to 6.98% of the total revenue of Nestle.
In the year 1990, they entered in confectionary business by introducing premium chocolates. In 1991, Nestle India entered a joint venture with BM Khaitan group for the production of soy-based products. In the year 2000, they entered the iced tea market and liquid milk industry.
Nestle earned a revenue of 5.7 lakh crores from all its 2000 companies in the year 2020. This is 2 times more than the revenue earned by Coco-Cola. Nestle India earned a net profit of 602 crores in the year 2021, which is equal to 124 crores Maggie packets worth of 5-rupee Maggi. It grew by 14.5 % compared to the year 2020. In the year 2010, nestle India began trading in the stock market. As of 2021 it has grown by 570% and has given an immense CAGR of 20%. In the year 2015 when Maggi was banned, the revenue fell by 15%. Post the legal battles and its return after 5 months, the CAGR given by the company is a steady 24% ever since.
47.1% of Nestle India revenue comes from milk products and nutrition, 29.6% of the revenue comes from processed food and cooking aids, 3.5% comes from confectionary and 9.8% comes from powdered liquid and beverages. It has strong leadership in 85% of its products and has given consistent returns to investors over the years. Nestle India has a good cash flow and has consistently grown over the decade.
If an individual had started a monthly SIP of 100 in nestle, in 5 years the money would have grown close to 10,000 INR.
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