"A Swiss bank that prints food," is what a Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY) scientist called the company. This five star CAPS-rated food giant manufactures food for everyone in your family from Baby to Grampa. Fido and Fluffy, too..
Nestle just won the title of the world's fifth "most beloved" brand in an APCO Insight survey of 70,000 consumers in 15 global markets. It was the number one most beloved food and beverage brand. For the eighth straight year it received the number one rank for a food and beverage company in Fortune's list of "100 Most Admired Companies."
Between womb and tomb The company has dedicated itself to a new emphasis on infant nutrition and senior nutrition, as CEO Paul Bulcke detailed at Investor Day at Nestle's Vevey, Switzerland company headquarters in October.
The company holds No. 1 market share in infant formula in most emerging markets, No. 2 in Europe, and No. 3 in North America.
In 2012, Nestle acquired Wyeth Nutrition from Pfizer Inc. (NYSE:PFE) and its portfolio of womb to tomb therapeutic nutrition products. Wyeth Nutrition is a different animal now with 10% of sales in 2010 coming from innovated new or renovated products and 75% of sales from entirely new or refreshed products.
Runs like a Swiss watch The company prides itself on its attention to detail. The raw materials for infant nutrition products are subjected to 20-50 tests and examined for 1,000 contaminants. Then, finished batches, all manufactured in-house, are subjected to 50-100 tests per batch and 1,000 tests per year per formula recipe. And you wondered why formula costs so much and is kept under lock and key.
That kind of attention to detail is imperative. Like a Swiss watch, Nestle has many moving parts. In addition to nutrition solutions, its food and beverage division manufactures well-known brands of candy, frozen foods, juices, waters and more.
As CEO Bulcke said in the Investor Day presentation the company was charged with having so many brands that it let underperforming brands underperform for too long. They're not going to slide any more, he assured investors.
A world of competitors With so many brands come many competitors, chief among them: The Hershey Company (NYSE:HSY), Mondelez International Inc (NASDAQ:MDLZ), Mead Johnson Nutrition CO (NYSE:MJN), Unilever plc (ADR) (NYSE:UL), Abbott Laboratories (NYSE:ABT) and Groupe Danone.
Nestle's most direct rival in the nutrition solution space, Abbott, is the number one infant nutritional company in the US. Abbott profits from adult nutrition, canned nutritional products that supplement meals for the aged, and infant nutrition. The company has more than 17 brands that address the needs of babies, the aging, and athletes.
Abbott has a subdivision of therapeutic nutrition for sufferers of diseases such as diabetes, cancer, and osteoporosis. Abbott co-founded the Alliance to Advance Patient Nutrition to battle and prevent malnutrition in hospital patients.
Abbott's other divisions include established pharmaceuticals (generics), diagnostic products, and medical devices. It isn't a pure play on supplemental nutrition, either. On Oct. 16 Abbott reported weaker than expected sales from its nutrition division due to Chinese supplier problems. Sales from its other divisions offset that weakness helping the stock surge 5%.