2009 Processor of the Year: Nestle USA

A $101 billion global company works hard at understanding shoppers with a $60 weekly food budget.

By Dave Fusaro, Editor in Chief

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It was only a matter of time before the world's largest food & beverage company became the largest processor in the U.S. and Canada. Nestlé SA's various operations in our two countries have been growing sales aggressively the past decade through a mixture of organic growth and acquisitions.

When we applied our unique analysis this summer to sales figures for this year's Top 100© list, we had a new leader. Nestlé's U.S. and Canadian operations together increased revenues by 14 percent in 2008 to $26.5 billion. Their parent, Nestlé SA of Vevey, Switzerland, had 2008 sales of $101 billion.

While Nestlé's operations in North America include several separate companies, at the core of all this activity is the broadest-based operation, Nestlé USA, based in Glendale, Calif. The $10 billion company encompasses beverages (both milk-based and coffees and teas), confections (Butterfinger, Nestlé Crunch, Wonka products), ice cream (Dreyer's/Edy's and Haagen-Dazs) and frozen food products (Buitoni, Lean Cuisine, Stouffer's).

Our Processor of the Year is an award for more than just size or financial performance. Nestlé USA is a leader in new product development, having debuted 70 new items this year. Not just a marketing organization, the company has 26 manufacturing facilities in the U.S. and manufactures the majority of its products. Nestlé puts a heavy emphasis on volunteerism and is a major supporter of Feeding America (formerly America's Second Harvest), the country's largest hunger relief charity.

For these reasons and many more, Nestlé USA is our Processor of the Year.

At Nestlé USA, a number of products enjoyed great years. "In 2008, our baking business grew 11 percent in sales and increased its market share," according to Brad Alford, chairman and CEO of Nestlé USA since 2006. "This growth was due to new product introductions, including Nestlé Toll House refrigerated cookie dough tubs, and increased distribution. Also, the Hot Pockets and Lean Pockets brands increased sales by 8.7 percent because of new product introductions and reformulations throughout the product lines.

"Our Ready-to-Drink chilled business also had good growth thanks to our new state-of-the-art aseptic factory in Anderson, Ind.," he adds.

(Nestlé USA does not include Nestlé Waters North America, Nestlé Purina PetCare, Nestlé Nutrition (Gerber baby food and health care products) and Nestlé Professional, or Nestlé Canada.)

Corporate values

Two themes seem to permeate this organization. First is the stated goal from the Swiss parent, that Nestlé SA is transforming itself into a "nutrition, health and wellness" company. That's a tall order when two of your most famous products worldwide are candy bars and ice cream.

But Nestlé USA and other units explain it as "the key to a well-lived life is a combination of physical activity and a balanced diet"; "making smart decisions, both big and small"; and "providing convenient, nutritious and delicious foods."

"We focus on three nutrition messages," explains Chavanne Hanson, Nestlé USA's "wellness champion," and one of 85 Nestlé SA wellness champions around the globe. "No. 1 is positive nutrition – but with taste and pleasure at the core. No. 2 is moderation and variety – to achieve a balanced and healthy diet. No. 3 is authenticity and transparency – clearly sharing the nutritional value and nutrition content including fat, calories and sodium of all our products.

"With this in mind, all foods can play a role in the context of a healthy diet," she says.

Moreover, it means tweaking recipes in every product line for optimal wellness benefits without sacrificing taste; providing healthier options of nearly every product for those who need them (and not forcing them on those who don't); and reminding consumers that self-control plays a big role in health — that with a sensible choice for lunch, a mid-afternoon candy bar is OK; that with a healthy dinner, a little ice cream is an acceptable nightcap.

Asked what would be the most important point to get across, Alford says: "That all of us at Nestlé USA are passionate about giving consumers great-tasting and nutritious foods and beverages they can feel good about serving to their families. We know that maintaining a healthy lifestyle requires making smart decisions, which is why we make it a priority to provide consumers with better-for-you options as well as nutritional information."

The other theme is "Creating Shared Value." It was developed at Swiss headquarters and posits that a company cannot deliver long-term value for its shareholders without contributing to society. "It is not philanthropy or an add-on, but a fundamental part of our business strategy," says the corporate report on the subject. "We need to create value for the people in the countries where we are present. This includes the farmers, who supply us, our employees, our consumers and the communities where we operate." And later: "We need to demonstrate responsible behavior – by assuring compliance and sustainability."

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