Good Food, Good Life
Nestlé
Tagline
Net Worth
$304,100,000,000
Started in (City)
Vevey
Started in (Country)
Switzerland
Incorporation Date
28th December, 1959
Bankruptcy Date
-
Founders
- Henri Nestlé
About
Nestlé is a multinational food and beverage processing global conglomerate founded by Henri Nestlé in the town of Vevey, Switzerland. Nestlé is the largest food processing company in the world and is ranked No 64 on the Fortune Global 500 list. Nestlé is also one of the largest public companies according to Forbes Magazine. Some of the products produced by the company are infant food, water, breakfast cereal, coffee, dairy products, ice creams, and snacks. Nestlé is a major shareholder in the world's largest cosmetics company, L'Oreal.
Beginning
Unlike today, pure, fresh milk was a prized commodity in towns and cities across Europe. Since there was no facility for preserving the milk like a refrigerator, milk used to get spoiled in the transportation. Additionally, Milk was adulterated with chalk, water, and other substances. People had no other alternative but to consume this unfit milk which was often a major carrier of diseases. To tackle this, condensed milk was created and introduced to the market. While fresh milk had spoiled due to long supply chains, canned milk was nutritious, portable, long-lasting, and, most crucially, safe. Condensed milk became a big hit in the US. Seeing this, Charles Page (The then US Vice Consulate of Trade to Switzerland) dreamt of similar success in Europe and British colonies when he arrived in Zurich in 1865. He founded AngloSwiss Condensed Milk Company in 1866, the next year of his arrival. He sent his brother George Page to the US to learn from Gail Borden who pioneered the process for producing condensed milk in the 1850s. The process involved heating milk to evaporate some of the water, then adding sugar as a preservative. Then, together with the American Page brothers established Europe's first condensed milk factory in Cham, Switzerland.
They introduce their first product "Milkmaid brand" soon with a bold advertising claim 'Ours is the original condensed Swiss milk and the best. Every other kind is inferior’. The company's name was chosen to cajole the British empire and its colonies as they had quite an appetite for condensed milk. The tactic was successful and as early as 1868, Anglo-Swiss sold over 374,000 cartons of condensed milk.
The Page Brothers had the best technique and technology of that time to produce good quality condensed milk. The brothers, particularly George as Charles died in 1873, adopted a leadership style and a business model that was advanced for the era. Anglo-Swiss used only fresh milk from local cows, and farmers were guaranteed payment for daily supplies at an agreed price. Milk was delivered to the factory in steam-cleaned churns and tested in a laboratory for its fat content and purity. Farmers were given technical help to increase milk quality and quantity, and George Page encouraged advanced methods for keeping and feeding cattle. Anglo-Swiss staff who fell ill were given pay when they were sick or suffered workplace accidents, rather than simply sacked. George Page also built housing for staff in Cham and a kindergarten for their
children. During the same time in the other corner of Switzerland, German-born pharmacist Henri Nestlé was working on infant food. In 1867, he launched his ’farine lactée’ (’flour with milk') in Vevey, Switzerland. It combines cow's milk, wheat flour, and sugar, and Nestlé develops it for consumption by infants who cannot be breastfed, to tackle high mortality rates.
Road to Success
It was around the same time that Nestle came up with the ’Nest’ logo which is still a symbol of Nestlé. The recipe of Nestle of baby food soon gain popularity and became indispensable to Swiss society. By 1871, the market of Nestle food stretched to Western Europe and factories were producing 1,000 cans every day. Finally, in 1875, Nestlé’s milk-condensation process fixed his problem of removing all the water from the milk added to his chocolate, thus preventing the product from developing mildew. The two men subsequently formed a partnership that resulted, four years later, in 1879, in the organization of the Nestlé Company. Henri Nestlé retired in 1875 but the company, under new ownership, retained his name as Farine Lactée Henri Nestlé - "Henri Nestlé’s Milk Flour" in French.
In the 1920s, the manufacture of chocolate became the Company's second most important activity. New products appeared steadily: malted milk, a powdered beverage called Milo, and powdered buttermilk for infants. The reorganized management helped the company sail through the Great Depression smoothly. After 8 years of research, the Brazilian Coffee Institute and Nestlé came up with a soluble powder- Nescafé in 1938 that revolutionized coffee-drinking habits worldwide. Annual production levels reached one million cases by 1943. World War 2 proved beneficial for Nestlé as its total sales jumped from $100 million in 1938 to $225 million in 1945. The Company’s total sales doubled twice in the 15 years after World War II. From 1950 to 1959, sales of instant coffee nearly tripled, and from 1960 to 1974, they quadrupled. Diversification came under Chairman & CEO Pierre Liotard-Vogt when Nestlé ventured outside the food production industry. They became a major shareholder in L’Oreal in 1974 and later acquired Alcon Laboratories Inc., an American pharmaceutical company in 1977 for 280 million dollars.
Today, Nestlé is a multinational food and drink processing conglomerate corporation. It is the largest food company in the world, measured by revenues and other metrics, since 2014. Nestlé owns more than 2,000 brands that are sold in more than 197 countries around the world. Starting from Condensed milk and baby food, its portfolio now includes medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. It is ranked #54 on Forbes World's Most Valuable Brands 2020 and valued at $12.3 billion. The Company’s objective is to be the world’s largest and best-branded food manufacturer while ensuring that Nestle's name is synonymous with the products of the highest quality.
Challenges
In 1877, the rivalry between Nestle and Anglo-Swiss heated up when both of them started producing flagship products of each other. Anglo-Swiss added milk-based baby foods to its products; in the following year, the Nestlé Company added condensed milk to its portfolio. In the competition, both the competitors thrived but they were failing to make huge profits because of the price war. The brothers and Nestle refused to concede in this war and both were not in favor of the merger. George Page, the last man who opposed the merger, died in 1899. In 1905, the directors of the companies signed the agreement, and the Nestlé and AngloSwiss Condensed Milk Company were born.
comparatively smoothly. World War II affected the profits of the company tremendously. Profits dropped from $20 million in 1938 to $6 million in 1939. But the company was preparing for this situation since WW1. To overcome distribution problems in Europe and Asia, factories were established in developing countries, particularly in Latin America.
After the agreement with L'Oréal in 1974, Nestlé's overall position changed rapidly. For the first time since the 1920s, the Company\’s economic situation deteriorated as the price of oil rose and growth in the industrialized countries slowed. Also, foreign exchange rates deteriorated with the French franc, dollar, pound sterling, and mark all losing value relative to the Swiss franc. The first major accusations against Nestlé were raised in the 1970s. Nestlé was accused of discouraging mothers, particularly from less economically developed countries (LEDCs)
from breastfeeding and suggesting that their baby formula is healthier than breastfeeding, despite there being no scientific evidence for this. This led to the launch of the boycott in Minneapolis, USA, by the Infant Formula Action Coalition (INFACT), and this boycott soon spread to Australia, Canada, New Zealand, and Europe
Failures
The first world war impacted the economies of all countries. Even though Switzerland was neutral in the war, it suffered a severe economic crisis caused by a decrease in energy consumption. The supply chain was disrupted and a shortage of raw materials. The distribution of goods was also a problem as every continent was at war. Nestlé depended on fresh milk for many of its early products, and there were shortages of milk and almost every other fresh product during this period. Nestlé survived the war by big-scale several government contracts. To meet the requirement of the government they expanded rapidly. This episode changed its traditional structure. When the war came to an end in 1918, Nestlé had 40 factories across the globe. In 1921, the Company recorded its first loss. Rising prices for raw materials, the worldwide
postwar economic slowdown, and deteriorating exchange rates deepened the gloom. Nestlé's management responded quickly and reduced the Company’s outstanding debt.
Achievements
- Nestle is the largest food processing company in the world.
- Nestle is ranked #54 on Forbes World's Most Valuable Brands 2020 and valued at $12.3 billion.
- Nestlé owns more than 2,000 brands that are sold in more than 197 countries around the world.
Subsidies
- Nespresso
- Gerber Products Company
- Blue Bottle Coffee Company
CEOs
- Mark Schneider