To bring increasingly more nutritious products to within the reach of lower-income groups, our Popularly Positioned Products (PPPs) initiative has been greatly expanded. Growing profitably at an annual rate of 27%, our PPPs encompass about 300 different initiatives and generate worldwide sales of CHF 5399 million.
Worldwide PPP sales
- Worldwide: CHF million 5399
- Europe: 782
- Americas: 1910
- Asia, Oceania and Africa: 2707
In 2008, the number of countries participating in the tracking of their PPP performance increased from 37 to 70, executing over 300 different initiatives and generating an organic growth of 27%.
In order to assess the success of this strategy even better, the definition of tracked PPP sales in Zone Americas was aligned with that of the other two Zones (from "bought by low income consumers" to "targeted at and bought by low income consumers".) On the basis of the old definition, PPP sales would have grown top-line by 39% with an organic growth also in the 20% range (the difference between top and organic growth stemming from currency effects and 2007 base sales of newly added countries)
The key to achieving this success is the application of new food and nutrition technology, and new distribution models.
Nutrition technology
A large proportion of the world’s emerging consumers suffer the consequences of deficiencies in iron, zinc, iodine and vitamin A. In particular, those on lower incomes can not afford to augment dietary staples such as cereals with more micronutrient-rich meat, fish, poultry and eggs. We therefore add low-cost micronutrients to our PPP products to address the most prevalent deficiencies at affordable prices, and invest CHF 30 million a year on research into shelf-stable, milk-based products, which are naturally rich in calcium and a good carrier of micronutrient fortification.
Distribution
To get our products to where consumers live, our Direct Store Delivery initiative in Asia and Latin America distributes PPPs directly to small retailers, with local agents using vans and motorbikes to reach rural locations. In other countries, we increase market penetration and product availability through local distributors, who sell to small, local stores or directly to consumers in street markets and community centres, and at other social events. Supported by micro-loans, these local channels include mobile Nescafé bars in Thailand, vending coffee carts in West Africa and door-to-door distributors in Brazil.
The value created by our PPPs extends beyond access to affordable nutritious products to other aspects of society. By using local manufacturing and distribution networks, we can create direct and indirect employment opportunities for factory workers, agents, brokers, suppliers and distributors, which boost local economic development and skills through training. Local sourcing also provides suppliers with regular income from a reliable market and free technical advice via networks such as Nestlé milk districts.
Nestlé’s factory in Feira de Santana, in the Bahia region of Brazil, was opened in 2007 and produces Maggi instant noodles. Backed by a CHF 52 million investment by Nestlé, the plant brings direct and indirect employment opportunities to an economically deprived region, while increasing local workforce skills and raising environmental standards. It also helps Nestlé to reach 50 million consumers in this part of the world. Maggi instant noodles are popular in many countries of Latin America, Asia, Oceania and Africa. They belong to Nestlé’s family of Popularly Positioned Products (PPP), offering a nutritious food choice for everyone, but particularly for people who have reduced spending power.
Links:
Nestlé creates a market for rural milk farmers, China
