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Nestle SA launches innovative campaigns for stronger confectionery forays
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Tuesday, 14 February, 2012, 08 : 00 AM [IST]
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Nestle SA, a company known for nutrition, dairy and confectionery products, has ambitious plans to make stronger forays in the confectionery segment. In this regard, the company has come up with several innovative campaigns.
As part of the fresh campaigns, Internet shoppers in Switzerland and Liechtenstein can order a Maison Cailler taster pack with five kinds of chocolate. After completing an online survey to determine a “chocolate personality,” recipients get a bigger box with flavours and cocoa content selected for those particular taste buds.
According to Laurent Freixe, head, Nestle’s European business, luxury products can succeed even amid the economic downturn. Global sales of premium chocolate are growing faster than the overall market and may be worth about $8 billion a year, as per market research organisation Mintel.
“It may sound counter-intuitive, but what’s happening in the crisis is a quest by consumers for value, for more affordable product, but also for products that overtake their expectations,” Freixe said. “And what is squeezed in the middle is mainstream product.”
More than 20 years after Vevey, Switzerland-based Nestle started selling the Nespresso capsules that helped create the luxury home coffee market, it is applying a similar approach to chocolate. The venture may help Nestle in the premium segment, where rival Swiss brand Lindt & Spruengli AG has prevailed, with sales rising twice as fast as the market in 2011.
While Maison Cailler is starting small, the approach has served Nestle well in the past.
Nespresso began in only two countries in 1986, and the strategy evolved over time, with Nestle introducing online sales in the 1990s and stores in 2002. Now it’s a 3-billion Swiss franc ($3.3 billion) brand, with about half its sales coming from the Internet, and more than 250 boutiques worldwide.
The coffee unit probably helped drive a 7.1 per cent increase in so-called organic sales for 2011, according to the average of 12 analysts surveyed by Bloomberg. The measure excludes acquisitions, disposals and currency shifts. Nestle will release its results on Feb. 16.
Nestle has been taking its cue from Nespresso’s success with other premium products. The company last year began selling BabyNes formula milk capsules, a year after introducing Special.T pods containing top-quality tea in France.
“Consumers like to be treated as individuals rather than as a mass market,” said James Amoroso, a food industry consultant based in Walchwil, Switzerland.
While Nestle’s KitKat bars are the ninth-biggest chocolate brand, according to Euromonitor International, the Swiss company has had mixed success in the premium segment. Nestle, which merged with Cailler in 1929, sought to revamp the brand in 2006 with packaging designed by architect Jean Nouvel and higher prices, though the overhaul was scrapped after it failed to boost revenue. Cailler still isn’t well-known outside of Switzerland, with only 8 per cent of sales coming from abroad.
“Nestle is a strong player in the mass-market, but in the premium segment it doesn’t have a strong reputation,” said Patrick Hasenboehler, an analyst at Bank Sarasin & Cie. in Zurich.
Maison Cailler may also have to contend with the impulse-buying aspect of chocolate sales. Many consumers tend to buy chocolate on the spur of the moment for themselves or at the last minute as a gift, according to Marcia Mogelonsky, an analyst at Mintel in New York.
Maison Cailler customers have the option of choosing tablets of chocolate or personalised boxes containing 16 pieces with a range of praline fillings ranging from peppercorn and vanilla to raspberry and verbena. Prices start at about 20 francs for a box, Freixe said.
“The big objective is to make it sustainable, make it something which will enter into consumption habits and which will not be just a one-off,” he said.
Maison Cailler is starting out small. The high-end chocolate, made by the 193-year-old Cailler brand using cocoa sourced in Ecuador, will only be expanded into neighbouring countries later this year or in 2013.
Chocolate producers including Lindt already sell online, though only for standard products. Customisation tends to be limited to the packaging and bespoke chocolate is generally sold by niche chocolatiers.
The online store will generate the bulk of Maison Cailler’s revenue, though some sales will come from a boutique in Broc, Switzerland, where the brand is based. Temporary stalls in high-traffic locations will also help promote the brand.
Maison Cailler also appears to be aimed at bolstering Nestle’s know-how at selling over the Internet, said Jean- Philippe Bertschy, an analyst at Bank Vontobel in Zurich.
“E-commerce is still new territory for Nestle,” he said. “Nespresso is the best example of it so far for them and they’re also doing some with other brands, but these are still new experiments for them.”
In addition to selling Special.T and BabyNes capsules online, Nestle last year rolled out a German website that allows consumers to purchase from a range of 1,500 Nestle products such as Maggi soup and Moevenpick ice cream. Wan Ling Martello, who will become Nestle’s finance chief in April, comes from an online retailing background, having served as vice-president of global e-commerce and emerging markets at Wal-Mart Stores Inc.
The financial impact of Maison Cailler will probably be limited initially, with annual sales reaching 5 million francs to 10 million francs during the first three years, according to Bertschy. Nestle hasn’t said how much it’s investing in the venture or how much revenue it may generate.
“Maison Cailler isn’t going to be an overnight success, but Nestle knows this and they are long-term-oriented enough to know that they have to stick with it,” Amoroso said.
Source: Bloomberg
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