Our industry is transforming into one that is driven and shaped by data and technology. From engaging the consumer through analytics to speeding up operations with artificial intelligence (AI), we are accelerating our digital transformation to drive growth and agility.
Consumers today want access to goods and services their way, regardless of channel. They care about sustainability and health. And they expect brands to offer personalized solutions in real time. To meet these needs, we are focusing our digitalization efforts in the following areas:
- Creating channel-less ecosystems
- Advancing always-on analytics
- Expanding connected operations
- Supporting sustainability
Creating channel-less ecosystems
We see enhancing digital capabilities as a key driver of our evolution. Across each of our categories, digital ecosystems are unlocking new avenues for insight, innovation and sustainable, profitable growth. Our digital-centric businesses are acting as lighthouses to transform our core brands.
The optimal consumer experience is just as important as the optimal product. Our strategy is to delight different audiences with the right experience and content optimized for every platform. We are focused on channel-less commerce, thinking together with our retail partners about the brand experience rather than individual channels.
Through the responsible use of data, we are identifying growth opportunities where we can develop and adapt products that meet consumer needs. We leverage data across our category ecosystems to drive traffic and identify new business opportunities. We seek growth across digital ecosystems, from partnerships with retailers to direct-to-consumer businesses such as Nespresso, Persona and Tails.com.
Nestlé partnered with Italian blogger and fashion designer Chiara Ferragni for a limited edition Nespresso x Chiara Ferragni collection and digital campaign.
Strong growth in pet care is an example of how digital connections to the consumer can be successfully leveraged through an ecosystem of products and services. The business has been on a journey of digital transformation, evolving from a pet food business to a pet care business. We acquired Wamiz, the pet adoption and advice platform, in 2018. Nestlé's majority stake in Tails.com is boosting our data and analytic capabilities. We are collaborating with scientists, veterinarians and pet care professionals to deliver advanced pet food solutions and first-class pet care services. Thanks to the momentum created by this network of partners, we are now an attractive partner of choice for start-ups through our Unleashed accelerator program.
In 2021, our e-commerce sales accounted for 14.3% of sales and grew by 15.1%. This strong growth reflects our agility in adapting quickly to rapidly evolving consumer demands. We expect to increase our investment in digital marketing by 50% and almost double the percentage of e-commerce by 2025.
Advancing always-on analytics
Quick access to actionable data insights is key to understanding fast-changing consumer needs and optimizing our demand-generation activities, thus maximizing our resources. We are harnessing the power of data to streamline our business practices, becoming more strategic and predictive while making changes in real time. We continue to upgrade our analytics capabilities to measure the value of each consumer and customer touchpoint and the impact of every campaign. This allows us to make smarter, quicker decisions.
Backed by powerful data models and algorithms, our AI-powered sales teams can increasingly optimize our sales prices and promotional activity. Smart identification of priority outlets and must-sell items allows for even better investment behind our brands. Our strategic revenue management program now covers 90% of our markets. This capability helps us to define go-to-market strategies and feeds the continuous evolution of brand value propositions, product formats and pricing structures. We are also leveraging AI with end-to-end analytics to deepen collaboration with customers, prioritize production and enhance promotion effectiveness.
We can adjust channel strategies in real time, including our direct-to-consumer models. Increasingly, our brands employ our own 1st party data to tailor messaging to their consumers' needs while respecting privacy. Our digital media campaigns are supported by an expanded network of 35 content studios that efficiently deliver dynamic, high-quality personalized content.
Expanding connected operations
To delight our consumers, our teams in operations must master every step of the production process, from sourcing of materials to manufacturing in our factories, to the supply of our products at the point of purchase. At the same time, we are increasing our ability to tailor our products to our customers' specific needs.
All of this is made easier by innovative digital solutions and capabilities. We call it connected operations and have deployed the core technology to more than 100 sites worldwide. All of our factories, not only the most advanced and modern, are benefitting from the changes.
It all starts with better connected workers, giving our people the tools and information to take the right decisions quickly and easily. AI and predictive analytics enable the delivery of consistently exceptional quality and zero breakdowns, while collaborative robotics support factory automation and end-of-line customization. That gives us a new level of flexibility to produce for different channels and routes to market.
Since 2017, Nestlé's in-house content studios have grown from 5 to 35 across all markets, consolidating the creation of original brand content for all digital channels.
Connected transport hubs have better visibility and are able to plan deliveries more reliably and sustainably. Real-time tracking of trucks in transport hubs allows for fast rerouting in case of problems, less waiting time and fewer wasted truck miles.
Connected operations is helping us to act more as one team across all functions with complete visibility of the entire process from start to finish. By breaking down silos we are closer to our colleagues, suppliers, customers and consumers. Changes in demand or challenges in the supply chain are visible in real time so we can adapt fast in the most coordinated and effective way. This gives us a competitive advantage.
Digitalization not only supports efficiency and growth, it also helps enable our sustainability agenda. To that end we continue to deploy systems and tools to monitor our progress with increased accuracy, through better primary data and improved calculations, in areas such as sustainable packaging, responsible sourcing, climate change and water management.
Our work with partners to test and deploy technology solutions in our upstream supply chains continued in 2021. This supports transparency by improving end-to-end traceability and substantiating sustainability claims. With our partner OpenSC, alongside farmers and suppliers in Congo, we designed a technology blueprint for end-to-end coffee traceability using smart devices and QR codes. We also tested methods to monitor and verify certain sustainability aspects of our supply chains, such as farmer's income, through mobile money.
Connecting for speed and agility
When Regiane Christina Vitorino de Souza starts work, the first thing she grabs now is a screen. Since Nestlé rolled out connected, paperless operations to put tablets in every line routine, Regiane has been able to take her work to a higher level.
Regiane's factory in Caçapava, Brazil, produces 2 300 000 units of confectionery a day, including famous brands like KitKat, Alpino and Prestígio. Customers and consumers rely on her to produce, pack and get products ready for shipping on time. Working in a new digital environment means Regiane has access to real-time, accurate information, and always knows what is happening in the factory and on her line. That really helps her do her job.
Regiane has the autonomy and the information to know exactly when she needs to take a sample of a product or perform an analysis. When the time comes to complete the documentation and release a batch for shipping, that is also digital-based.
The same principle extends to the support network, too. Gone are the days when operators might find themselves alone on the night shift at a critical moment. With digital tools, Regiane and her colleagues can access troubleshooting systems that guide them to the right solution for issues they might face.
Connected operations means more agile, more flexible and more competitive manufacturing. Just as importantly, Regiane's hard work is fully recognized because of the transparency and information available to all.
72 hours is all it takes to develop test molds for customized products with 3D printing, rather than the two months it used to take
The Annual Report contains our Annual Review including Creating Shared Value highlights, the Corporate Governance & Compensation Reports and our Financial Statements