Milk Industry

Pakistan’s milk industry has been the fourth largest milk producing country
since two decades. Major brands included in this are Haleeb Milk of Haleeb
foods, Milk Pak of Nestle and recently introduced Olpers and Nesvita.

Milk Usage and Production

Pakistan’s annual estimated milk production is around 44.97 million tons out
of which
• 36.299 million tons is consumed by households
• 1.35 million tones i.e. three percent is consumed by milk companies
and
• Remaining is utilized by the industrial sector

According to the official figures about twenty percent of the gross

productionof cows and buffalos is wasted due to poor transportation and
calving. Although the overall share of the milk processing companies is about
three to four percent in the economy.

Origin of Packaged Milk

The concept of packaged milk was introduced by Nestle in 1981 when they
came up with a packaged milk product by the name of Milk Pak. They came
up with this product when they saw people getting more and more health
conscious.
Why Packaged Milk

Supply Chain of Packaged Milk

Supply chain involves collection of milk from the rural areas. Then that milk
is then processed through UHT (Ultra – High Temperature Processing)
Treatment. This milk is then packed into the uniquely colored triangular and
rectangular packs designed to prolong the milk’s quality. The milk in it
remains fresh because the packs are vacuumed i.e. air free from air due to
which they don’t get spoiled. This milk is then sold to consumers.

Increasing Demand

Increasing urban population, more educated consumers and an emerging

middle class have helped increase the growth of packaged liquid dairy
products (LDP) by 19 percent per annum during 1999-2009 in Pakistan

In 2009 LPD consumption has reached 18.9 billion liters, which has kept
Pakistan as the fourth largest LDP consumer after India, China and US. The
Dairy index shows that over the last 10 years, the ratio of urban population
in Pakistan has increased by three percent points and as people move
further away from dairy farms the availability, access to fresh unpackaged
milk is significantly affected. This in return creates demand for the packaged
milk because of its availability in the urban areas. Moreover the increase in
urbanization also created more educated and sophisticated segment of
consumers, which values safety, hygiene and convenience of processed
packaged milk.

Rising Population of Pakistan is also raising the number of people falling into
the middle class category. These people can now afford more premium
priced products. That is why from alone 2006-2009, the consumption of LDP
has grown 8.4 percent per annum as compared to demand of unpackaged
products which only grew by 2.1 percent per annum

Market share of Packaged Milk

Currently thirty percent of Pakistan’s population is under nine years of age

and 53 petcent is under nineteen years. There is major chunk of population
that could be attracted towards packaged milk. According to the survey
conducted by us from a sample of 100 females who drink milk, only 11
perecnt of them drink unpackaged milk whereas the rest drink packaged
milk of different brands
Major Players

The major players in the market that have a tough competition between
them are as follows
According to the survey conducted from a sample size of 100 females, the
following brand were found to be used by them.

SWOT analysis of Milk Industry in Pakistan

Strengths:
• Dairy industry of Pakistan is the fifth largest industry in the world
• Pakistnan’s dairy industry is cheaper than Australia, America and other
developed countries.
• Farmers are engaged in agriculture and dairy at the same time.
• By- products of agriculture are used in dairy
• By-products of dairy are used in agriculture.

Weaknesses:
• Poor profitability for farmers
• Lack of contacts for the farmers to the market mechanism
• Poor dairy infrastructure in rural areas
• Lack of education among the farmers is making it difficult to change
farm and dairy management system.
• Lack of knowledge about optimal feeds
• Bad quality of milk due to lack ness of cold chain.
• Availibity of trained support service staff.
• Difficulties in meeting consumer demands due to unavailability of fresh
milk.
• Imported products increasing demand in local market.
• Product range not developed properly for consumers.
 • Milk production decline to 55% of peak production at its lowest point in
mid-June. While at the same time, the demand increases by 60% as
compared to December.

Opportunities:
• There are prospects for company to bring in valued added products
like khoya, flavored milk, ice creams, shrikhand, dairy sweets, paneer,
etc.
• Further innovations can be done with packaging, development and
presentation as there is a huge scope for it.

Threats:
• Dairy farms receive very bad/low quality milk which is a big threat for
this market.
• Unavailibility of animals by which we get milk is also a huge threat for
the milk industry.
Nestle

“Good Food, Good Life: the key to health, nutrition and wellness”

Nestle Pakistan limited is a Pakistan based food and beverages company and
is the leader in food and beverages industry terms of having largest R & D in
food science and nutrition. Due to this, many of their brands have taken
advantage of its active ingredients developed at the research center. It has
been recognized the top food company in the world due to there aim to
provided quality food to there consumer so that they can have a good life.
The company started its manufacturing processing in 1988 when the parent
company Nestle SA acquired the shares in Milkpak Ltd and since then it is
serving Pakistani consumer market with sale of food products. The company
is registered in KSE and LSE for last 5 years in Pakistan and is being declared
among the top 25 companies in KSE by 2014. The company goal is to be a
100 billion rupees company. The learning and growth for human capital in
this company is tremendous both at international and domestic levels. The
company provides over 8000 brands all over the world and they are
renowned for the health benefits, taste and good quality. Their philosophy is
summed up in the phrase "Good Food, Good Life: and they remain committed to
help consumers choose better tasting and healthier products to help them enjoy
happier, healthier lives”.

Nestle Brands

“When it comes to food and Beverages Pakistanis know they can rely on
Nestle”

Nestle develops the products keeping the consumers preference, taste and
needs. Whatever products they come up with are pure, nutritious and have
convenience. They have always been the initiator in creativity i.e. they have
most of the time introduced differentiated and unique products. Their
product portfolio includes the following
Their product line is broadly diversified into seven different kinds of products.
The products are further classified into different flavors, taste etc

1. Milk, Dairy and chilled Dairy

• Milk Pack
• Nesvita
• Nido
• Neslac
• Everyday
• Nestle Dahi
• Nestle Fruit Yogard
• Nestle Raita
• Milk Pack Cream

2. Beverages

• Nescafe
• Nesquik
• Milo
• Nestle Fruita vitals

3. Bottled water – Nestle Pure Life

4. Baby food – Cerelac

5. Food – Maggi 2 minutes Noodles

6. Breakfast Cereal

• Corn Flakes
• Honey Gold Flakes
• KoKo Krunch
• Milo

7. Chocolate and Confectionery

• KitKat
• Kitkat chunky
• Polo
Nesvita - Diffentiated Product in Milk Industry

About the Product

Nowadays there are various diseases which are causing sickness as

compared to former. These diseases can run into sugar and even heart
failure. This is because of the high cholesterol which is due to the
consumption of high fat food items like milk, oil etc. Because of this reason,
the FMCG companies of focusing on products which have low fats in it. Nestle
is also very health conscious about their consumer health and this is the
reason they have introduce low fat high calcium milk with the brand name of
Nesvita. This product has 50% more calcium as compared to regular milk
and is specifically produced for those who are conscious about the healthy
lifestyle. This product provides the strength as well as the smartness that
one desires. More calcium in this milk means more strong and healthy bones.

TARGET MARKET
Nestle’s Nesvita targets the market who are health conscious about them selves.
Since in our part of the world, health is majorly being looked after by women, there
fore they have specifically targeted the todays women who is either married or is on
Job. Nestle’s Nesvita believes that it’s the women who need to consume the low fat
milk along with high calcium. Nestle’s Nesvita plays essential role in protecting
women from osteoporoses disease which speeds up the process of calcium loss in
bones causing them to become weak and fragile.

Demographic segmentation

The demographic segmentation for Nestle’s Nesvita is specifically for

moderate income people who are either from middle class or upper class families.
Due to its health conscious factor, it majorly targets women who want to live healthy
lifestyle. One who are concerned about their children, elders and themselves health
and weight.

Psychographic segmentation

Nestle’s Nesvita concentrate on health conscious women who value their life style
and their personality traits. These are the women who want to achieve success in her
life and who want to fulfill her dreams. This is the reason why their aids narrate the
same concept and message. All these segments were identified and based on them;
Nestle’s Nesvita was ready to position it self in customer mind through the following
promotional strategies.

Market position

The main focus of Nestle’s Nesvita is on the lifestyle and health and that is why
it creates a diverse position in consumer mind by using market lines like “B o
n e s S t ro n g T o u M a i n S t r o n g” which clearly states that there they
want to spotlight the healthy lifestyle in their consumer minds.

Slogan

“Bone Strong Tou Mein Strong.”

Producing more than 10.000 food items, Nestle is the world’s largest food company
and is growing big time. It has captured large part the market share. Although they
have a name in the market, due to large competition in milk industry, it is suffering
a decline in the market. However they have re-launched their product in diversified
manner and brought a new trend.

SIZES Available
 • 1 Liter (Milk)
• 200 ml (Milk)
• 450 gm (yogurt)

Ingredients

• CALCIUM 27-30%
• PROTEN 15-18%
• POSPHORUS 31-34%
• VITAMIN A 6-9%
• ENERGY 160-169 K CAL

Pricing

The prices on Nesvita is selected based on the ingredients cost and

operational cost ( packaging, processing,, logistics, weighing etc)

Psychological pricing

The products psychological pricing is used as well. Prices are quoted high so that it
can reflect the positioning for “Hight quality on High price”

Price Structure
(Consumer price)

• 20 ml Rs. 20 (Milk)
• 1000 ml Rs. 65 (Milk)
• 450gm Rs. 38 (Yogurt)

Distribution and Placement

The product is distributed through authorized distributors who are selected

on a tough criteria i.e. qualification, previous experience of the same field,
distributor’s storage place which should be neat, clean and up to the mark,
his vehicle etc

Proper planning by following demand and supply rule carries out distribution. Also the
distribution strategy of the competitors is considered. Inventory level of milk in the
godowns of the distributor is always kept more than the demand of the potential
customers.
It is distributed in all “A” class superstores of high traffic market of posh
areas. For example in case of Karachi the areas of high availability are
Makro, Mettro, Aaghaz, Naheed and other super and general stores

Strengths

• Strong Brand image of Nestle thus high quality and goodwill

• Differentiated product since the first one to target females and health
conscious people
• Nestle’s focus on Research and Development

Weakness
• Less awareness of the product among the females

Opportunities
• Nesvita brand may get entire market share by availing opportunities in
market that include health conscious people
• Increased knowledge of health and awareness
• It has no direct competition right now

Threats
• Competitors may enter into this category as well.
• There is less loyalty as far as milk is considered
• If quality or taste is not liked by the target market
• Price is also a factor
• High collection of milk is required
• Credit systems is not available for the firm as being given by local
loose milk producers

BCG Marix
Keeping the BCG matrix in view Nestle Nesvita is a Star since it is the first
one to identify this market need and introduce a product that is directly
targeting females and indirectly all those who are health conscious and don’t
get time to exercise but want to remain fit and healthy. It includes people of
all age.

Promotion

Advertising

All advertisement used by Nestle Nesvita highlights that over the years, food
products have evolved from mere commodities to a statement of life style,
as a consumer gets more health and quality conscious, consumer
empowerment surges. They say that if you are set for an active and healthy
lifestyle then you need to get the strength your bones need and the
smartness you desire, with Nestle Nesvita Milk as its high in calcium and low
in fats

Broadcast ads

Nestle Nesvita has captured the women of today both either working or
the ones who are housewives need to have stronger bones and
consume more calcium than anybody else. They believe that kids can
bloom and blossom more if their parents especially mother is strong,
their parenting will lead these children to be smarter and healthier.

Two TVCs are used so far by Nestle Nesvita for the promotion of their
brand. In one of the TV commercials a housewife is shown. She first
locks up her jewelery box which contains jewels; she then locks the
door for safetyof the house. In the end the husband asks her if they
could now leave. She then asks him that can I put the Calci lock? Then
she consumes a glass of Netle Nesvita as her body is more valuable
than jewels and for the sfety of her health and to have fit body she
needs to put up that Calci-Lock with 50% more calcium than regular
milk. It locks the calcium in your bones making them strong and
healthy. It contains a special combination of calcium, Vitamin D and
other essential vitamins and minerals

Print Ads

There are a number of print ads used by Nesvita in different newspaper.

All the adds that Consumption of 2 glasses makes your bones strong and
healthier i.e. “2 glass rozana bones strong aur tawana”, consumption of
two glasses of milk will keep your bones strong and you feel energetic.
The lock encircling the bone is calci lock i.e. calcium that locks your
bones strongly and prevents it from becoming fragile and weak. These
adds highlight the facts that everybody has a right to feel fit and stylish ‘Style
bina din guzara nai jata”.

Emphasis is given more on females. Their marketing campaign shows that ithe
working women of today has to be strong as she has to look after herself and her
family as well.

Sponsored TV Shows

Nestle Nesvita is sponsoring “ARY’s morning show”, there is a Nestle

Nesvita’s super fir segment where female is teaching different exercise
and giving tips to become fit. This attracts that segment of people who
exercise at that time, to consume Nesvita so as to become strong
along with fitness.

Growth Strategy

They have been doing aggressive marketing through different means. This
has helped them creating awareness among females of not only fitness but
also of this product. Since the awareness among people is increasing and is
the need of every person to remain healthy thus the market share will also
keep on increasing since every one now is becoming health conscious.
Nesvita directly is targeting females but indirectly all health conscious
people especially old age people who become the target of different
diseases like heart problems, high cholesterol problem, etc in old age.

Nestle as a whole is following the growth strategy of product

development by introducing new innovative products like Nesvita,
Celelac, maggi noodles, etc and catering the need of different target
markets through its different product like Cerelac for infant kids, magi
for children of age between 7 to 18, Nesvita for females. It is also
doing market Penetration by reaching the untapped market through its
distribution channels i.e. to increase the market share it is getting its
product available in different stores of untapped areas where he has
the target market.

Aggressive media and other campaigns are done for marketing its new
products but Nestle does not spend it funds for the marketing of
products that have high market share or are cash cows for the firm.
References

http://www.nestle.pk/

http://www.brecorder.com

http://tribune.com.pk