Nestle is a company on a mission to drive long-term, sustainable organic revenue growth across its geographies. The world’s largest food group has embarked on a different type of mission, with the goal of bringing healthy, nutritious food to a well educated consumer base. To some, this might seem at odds with a portfolio heavy in confectionery, pizza and ice cream. In part two of the just-food interview, Nestle CEO Paul Bulcke brushes off such concerns and insists the group will leverage its strength in science-based nutrition as it works towards a healthy future. Katy Askew reports.
As Nestle looks to deliver on the “Nestle Model”, targeting long-term sustainable organic revenue growth of 5-6%, the group must focus on leveraging its strengths.
In order to drive the top line, the company is working to increase its exposure to faster-growing emerging markets. Nestle has said it intends to generate around 45% of revenues in rapidly expanding emerging markets by 2020. However, rebalancing its sales base can only achieve so much – Nestle must also find pockets of growth in developed economies.
Nestle believes its strength in “science-based nutritional solutions” is one such growth opportunity. The maker of Lean Cuisine ready meals and Kit Kat chocolate bars believes nutritional arguments can be used to drive demand in its mainstream categories, as well as growing the functional nutrition category itself.
“If you see the whole portfolio of Nestle worldwide, health and nutrition is very important,” Nestle CEO Paul Bulcke says.
Nestle says its aim is to balance taste and nutrition, helping consumers make healthier choices. To this end, Nestle is developing products engineered to meet the nutritional needs of consumers at every stage of life, from pre-natal through to old age. These products feed through customer life-cycles, not only promoting healthy diets but also consumer loyalty at each stage of development.
“Infant nutrition is [particularly] important. We believe that healthy lifestyles later on start with a healthy start. That is what we say: ‘start healthy, stay healthy’. That is why we are really focused on nutrition in general.”
Nestle takes a research-based approach to the development of its products. For example, Bulcke highlights the extension of Nestle’s US baby food brand, Gerber, to older children through its Graduates line.
The idea came about as a result of the group’s Fit study, Bulcke reveals. “The Fit study is a study for knowing the dietary habits of kids in general. Quite a few staggering conclusions came out of that. But we can give solutions… The Gerber Graduates brand is a very good example of that. It works quite well.”
The study in the US was part of its broader Healthy Kids Programme and the company plans to extend its research to other markets, Bulcke says.
“We are going to extend the Fit study. It is amazing how much is still to be learned about diets and kids and age and ingredients and nutrients. [We want to] really understand the dynamic of these relationships and start building on a scientific base. We have seen in the United States our Fit study has been a good base for discussion, for dialogue with authorities.”
An important part of Nestle’s health and wellness platform comes in the form of consumer education. Through Healthy Kids, the company works in conjunction with educational authorities in 65 different countries in an attempt to promote an understanding of dietary needs, primarily through schools.
These efforts are unbranded, with Nestle providing base material and best practice but with the local authorities taking the lead in educating consumers. “It is the authorities that really embrace [Healthy Kids] and make it happen because that is the best way to do it, to build it into the national curriculum of schools,” Bulcke says.
“We believe that a company like Nestle sees a benefit in educating children because we try to have more and more rational, nutritional arguments on our products. Well, you can only have that when you have an educated consumer who listens and understands. We now have millions of kids [involved the scheme]. The kids go home and talk to their parents and it has a knock-on effect.”
The approach is one Bulcke believes will pay dividends in the long run. “It is about building up more understanding and more transparency and more intelligence for the people to decide for themselves. It is a long term thing but we truly believe in it. That is what we do. That is Healthy Kids.”
Nestle is also working with the International Association of Athletics Federations (IAAF), Bulcke adds. “Diet is one thing but we believe physical activity is so, so much in need. We work hand in hand – the Healthy Kids Programme integrating with IAAF, which is a marvellous organisation. We are also going to have leverage out of the programme so win, win again.”
Through product development Nestle is building up its portfolio of nutritional foods and through consumer education programmes the firm is developing long-term demand for these products. However, a significant proportion of the group’s revenues are generated in categories such as confectionery and ice cream. Bulcke denies there is any inherent contradiction.
“We truly believe that health and wellness is a life experience over time. Having a good ice cream is part of a good life. We could be very pragmatic and – I would suggest – hypocritical. We could say: ‘As it has a bad image… we will get out of that. We are going to try to paint a little [halo] because we are saints.’ That is false because people are going to continue to eat ice cream.”
Bulcke says Nestle is therefore focused on producing healthier alternatives in categories such as ice cream.
“Why then would I not use my knowledge and bring more nutritional arguments into ice cream? Taking, for the same experience, some negatives out. That is why we stay in these categories. We want to be part of a meaningful relationship with people through their lives, to be building with them a healthier lifestyle.
“Ice cream is part of a healthy lifestyle. But then again we are going to portion small ice creams for the kids. There are many milk arguments in ice cream: milk is good, it has proteins and all that. Then you have the cone, we can do full-grain cones. We can build a lot of good nutrition into products. We have the slow churned variety [which is] half-the-fat, one-third-less calories for the same [taste].”
That approach is echoed in Nestle’s attitude to confectionery NPD, Bulcke says. He insists chocolate consumption is an important part of a balanced diet. “I am a chocolate fan but I don’t eat 100g a day. Chocolate is part of a healthy lifestyle. Why should I get out of it? Chocolate is going to be part of people’s lives but I can do it meaningfully.”
Bulcke suggests in some ways it is “more difficult” for Nestle to continue to operate in categories that are commonly viewed as unhealthy. “People ask ‘how can you bring health and wellness and these categories?’,” he says. “Because I feel it is part of a healthy lifestyle if you have, first, a company that understands that relationship and can build it into products and also a consumer who can understand those relationships. It takes a little bit longer, it is more honest. And that is what we are – we try to be honest with ourselves and with the consumer.”
An important part of this “honesty” is the development of a clear and concise labelling system, Bulcke suggests.
Throwing his weight behind the use of Guideline Daily Amounts (GDAs), Bulcke says the controversial use of traffic lights in the UK is an over-simplification of the complex issue of nutrition.
“I feel the complexity of nutrition is a little bit bigger than saying red, yellow, green. Because who are you to say what is red? If you use a traffic light, almost everything is red. I would rather have an educated consumer. And that is why we are for GDA. GDA gives you a base of judgement.”
Nevertheless, while Bulcke says traffic lights fail to communicate fully complicated nutritional information, Nestle has signed up to the government-backed – but as yet voluntary – scheme in the UK, which includes traffic lights and reference intakes, previously known as GDAs.
“We are fooling ourselves but, that said, we are going to go with it in the UK. We are going to go with it because it is part of life, people want to try it out, lets do it and be close to it. I truly believe in monogram GDAs. If people are going to have an experience we will be close to it, but we are going to have our opinion.”
Click here to access part one of the just-food interview for details on Nestle’s drive to grow international sales and deliver the Nestle Model of 5-6% organic revenue growth.