Sourcing Coffee in China

Agenda
Nestle: Sourcing Coffee in China

Case Analysis

Significant Factors
Recommendations
This is an example Action Plantext. Go ahead and replace it

Nestle
A Global Presence

Company and Products Consumer-oriented food and nutrition company

Good Food, Good Life.

Size and Profitability 450 factories, 86 countries, employs 328,000 people

Strategy Nutrition Stakeholder trust Industry reference

Nestle in China
Chinas Coffee Growing Regions

1.

Yunnan Province

2. 3.

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Puer Autonomous Administrative Region

Kunming

Nestle
The Coffee Market in China

Sales

Coffee Consumption Instant Coffee = 90% of consumption

4% 14%

14% Coffee shares of market 68% Nestle

3-in-1: coffee,

sugar, creamer
Fresh coffee

remains a niche Early market arrival Nescafe Marketing and sales activity

Kraft
Domestic Other

Nestle
Agricultural Reform in China

Procurement and Prices

San Nong Policies

Specialized Farmers Cooperatives

12th FiveYear Plan

Nestle in China
Significant Factors: Stakeholders

Competitors Suppliers Community

Local Government

Nestle
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Nestle in China
Significant Factors: Instability with Suppliers Procurement from Small Farmers Some farmers have few coffee trees Training multiple suppliers is not economical Quality is not standardized Farmer Groups Pre-negotiated contract Opportunistic behavior by farmers Supply chain uncertainty

Nestle in China
Significant Factors: Government Policies Balance Securing Nestle profits and coffee procurement Aligning with regional and local objectives Leveraging policies Nestle Sustainable Coffee Culture Local branding Political achievements Key performance indicators

Nestle in China
Significant Factors: Competition
1

Starbucks McDonalds Corporation China Resources Ltd. Costa Coffee Domestic Brands

10

Nestle in China
Recommendations: Reward Supplier Loyalty

Incentive Plan

Membership Levels

Reward Longevity

1) Improved stability with procurement from suppliers 2) Builds sourcing barriers to competition through supplier loyalty

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Recommendations: Return Profits to Community

Invest 1% Profits in Local Communities

Nestle in China

Improved Education, Public Infrastructure, Environment, Health, and Wellness

Positive Response to San Nong Policies

1) Strong relationship with government for leveraging policies 2) Improved company image and loyalty further creating sourcing barriers to competition

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Nestle in China
Action Plan Supplier Membership Plan Higher Procurement Price - 3 year, 5 year

Additional Services Door-to-Door Procurement - Technician Support

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Nestle in China
Action Plan

Meal Plan

Meal Plan

Nestle Nutritious Breakfast

Nestle-Government Parents 60%-30%-10%

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Nestle in China
Action Plan

Scholarship Plan

Additional Rewards

Nestle Scholarships Provided to College Students

Nestle sponsored visits to oversea manufacturer factories or plantations

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Nestle in China
Action Plan
Supplier Information System 1 Supplier Information System 2 Supplier Information System 3

Created by local coffee committee

tAccessible to member coffee purchasers

Individual supplier credibility and information database

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Conclusion
Nestle: Sourcing Coffee in China

Case Analysis

Significant Factors
Recommendations Action Plan

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