Tuesday, October 19, 2010

The First Gretzky

Blink:
Hockey superstar Wayne Gretzky was asked, what makes you so great? He responded: “I am always skating to where the puck is going to be.” His rebuttal has forever resonated for me. Nestlé is skating to where the puck is going to be, thus becomes SMARTKETING’s first Gretzky award winner.
Read On:Nestlé announced this past month that they were making two major R&D investments, but will not yield a return on investment for years to come.

The first was that they are planning to build a R&D center and two manufacturing facilities in India. Their plan is to primarily use local ingredients and spices, as well as utilize low-cost Indian research, engineering and labor to make products for India and the rest of the world. The R&D center will be their 30th worldwide. As a marketer I am not surprised by Nestlé’s move. Leading Western companies like Kraft thanks to its acquisition of Cadbury, General Motors, DuPont and Bristol-Myers Squibb have all made the move to India. They are targeting emerging markets where fast growing economies in conjunction with younger populations will expand a consumer base that can afford consumer goods. What does impress me is the commitment that Nestlé made public: A.) Their R&D center will cost an estimated $50 million to build and hold 100 employees. They do not plan to outsource any of their R&D work; and B.) Currently India only accounts for 1% or $1.1 billion of their overall worldwide sales of $108 billion. Their goal is to achieve 45 percent of their total sales from emerging markets by 2020.

Nestlé’s second announcement was about their plan to create Nestlé Health Science and expand into the flourishing health and wellness market. This new wholly owned subsidiary will include an R&D unit in which they plan to invest over $500 million in pioneering a new industry between food and pharmaceuticals. Their products will assist and treat disease prevention that are the leading cause of deaths globally – diabetes, obesity, Alzheimer’s and cardiovascular disease.

The Swiss food giant is aggressively investing in its future, a great example of planning for long-term results – skating to where the puck is going to be. Nestlé gets the Gretzky.

5 comments:

  1. I only agree with your selection if Nestle uses their R&D to develop new platforms rather than extensions of current brands. If the Nestle move pans out as you predict, they may become more like Apple and less like Kraft. We shall all wait and see.

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  2. Good work, Jim! I strongly suggest you repost this to the discussion at the Emarketing Network Association on LinkedIn...six months ago, I posted a question about Outsourcing and am still receiving responses today..over 500 now. This post fits in perfectly with that discussion.

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  3. I have a non-business comment, but your quote about Gretzky hit home. My 9 yr old son plays football that way. He gets the tackle as anticipates where the runner is going. Thanks!!!

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  4. Knowing where the food business will go is getting more and more complicated. It used to be that the various channels were fairly discrete and clear, but now they are being blurred to the point that companies can no longer think outside the box, they have to ask themselves "why is there a box?"

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  5. "I am always skating to where the puck is going to be."

    NICE. I love tidbits like this.

    The one that sticks with me is, "You miss 100% of the shots you don't take." Wayne Gretsky

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