Question

What are the external opportunity and threats of Nestle?

Answer 1

OPPURTUNITIES:

• Increased mobility and car ownership increase demand for candy, bottled water and snack foods in nations like china.
• Changes in lifestyle,such as longer working hours, more women in the workforce, and more single person households, increase the demand for prepackaged foods.
• Growing middle classes in nations such as China and India create larger and broader markets for Nestle’s products.
• Increased interest in health and nutrition could increase demand for some Nestle products, such as energy drinks.
• Increased disposable income in countries like China could increase the demand for luxury items like bottled water, ice cream and pet food.
• Growth in online retail could open up new distribution channels such as Amazon Prime that can bypass traditional retailers.

THREATS:

• There is pressure from large retailers such as Walmart to cut prices.
• Retailers such as Walmart, Kroger and Aldi are increasingly promoting house brands, which are more profitable for them. House brands are often sold at a lower price and given greater visibility on shelves. Some retailers such as Aldi and Trader Joe’s emphasize house brands at the expense of traditional products.
• They have experienced disruption of the traditional grocery industry in countries like the United States by new players such as Whole Foods Market and online retailers.
• The growing use of new retail channels such as Amazon Prime and dollar stores may not favor traditional retail products.
• A growing suspicion of prepackaged foods as unnatural and unhealthy in Europe and North America is becoming common. This increases the demand for fresh and natural foods in some markets. It also increases the demand for organic and other alternatives.
• There is a growing ineffectiveness of traditional advertising as new technologies such as streaming video supplant traditional broadcast and print media.
• Consumers in some countries are eating fewer meals at home, which means less demand for some Nestle products. Bloomberg reported that Americans’ spending on restaurant meals overtook spending on groceries for the first in April 2015.
• There is a possibility of increased government oversight and regulations in some markets, such as India. India’s government ordered billions of dollars of Maggi instant noodles be pulled from the shelves in the summer of 2015 because of allegations of excessive levels of lead in the product.