Arla amba Foods

Competitor Analysis

• Asra Madni- 11317

• Aatir Hamood- 09090
• Barrya Hashmi- 05525
• Kashif Ullah Khan- 10939
• Ramsha Shiekh- 11245
• Raza Lakhani- 09102
Global Dairy
Players
The Competitor Set
DIRECT COMPETITION
● Organic Small scale

● Nestle
● Lactalis

● Saputo ● Danone
Financials Market Share
Pimsleur
● Amul Brands Sustainability
Arla
Growth ● Fonterra
Products
● Unilever
Customers Markets
● Muller ● FrieslandCampina
● Dairy Farmers of
America

● Retailers’ Private Labels

INDIRECT COMPETITION
 Primary Define Market, Products, and Geography

Need to Identify the Proper Performance

Measures

Level of Market Cost Leadership

Space
Competition- Differentiation
The Business Focus (Cost Leadership and Differentiation)
Unit Functional Customer-Based Functional Strategies

Corporate-Based Functional Strategies

Competitor-Based Functional Strategies

Players in the European Dairy Industry
The largest Established European Players
Primary
Company Revenue 2018 USD Billion Products Geography
Arla Foods 11.7 All Dairy Products Europe, MENA, Asia
(Philippines, Singapore,
Bangladesh).
Fonterra 13.7 All Dairy Products Australia, Brazil, Chile,
China, Indonesia, Malaysia,
New Zealand, Sri Lanka.
Nestle 24.2 Milk and Coffee Americas, Europe, MENA,
Asia.
Danone 17.6 Fresh Dairy Products Europe, Asia, MENA,
Americas,
Lactalis 19.9 All Dairy Products Americas, Europe, Asia &
Oceania, Africa.
FrieslandCampina 13.6 All Diary Products Europe, Africa, Asia.
Retailers’ Private Labels Fresh Dairy Products Local Presence Only.
 Identifying the Competitors

Steps Comments/ Objective

1. Scope and Purpose of To identify and analyze the range of strategies employed by the competitor set to our firm in response to
the competitor analysis. their strategies, and their strategies in response to ours.

2. Standard Set of To identify who do we normally think of as competitors?

Competitors. Those who are in similar markets and offer similar products and or substitutes.

3. Safe elimination of To identify and eliminate the competitors who pose the least threat to us.
Competitors. Based on financials and sustainable growth.

4. Safe addition of To identify the competitors who pose the greatest threats to us.
competitors. Those who compete on markets, products, revenue and sustainable business models.
Selecting the Competitors

Private labels are also

Based on the posing huge threats to Keeping everything in
These competitors are
objectives in the all the global brands. consideration, we have
selected based on their
previous slide, we have Amazon for example selected Fonterra and
Products range,
selected 2 biggest has recently launched Nestle as the biggest
Markets and Annual
competitors to Arla its private labels in the threat and competitors
turnover.
Foods. dairy product lines to Arla Foods.
also.
Market Scope Strategy

• In this section we will discuss the Market Scope Strategy by Arla,

Fonterra and Nestle.
• The Market Scope Strategy can either be 1 of four of the following:
1. Cost Leadership
2. Differentiation
3. Focus Differentiation
4. Focus Cost
The Market Scope Strategy will be covered on a holistic level and not
specifically for a single product line or Business Unit.
Arla Foods
Market Scope Strategy of Arla
• Arla Foods is committed to work around Cost Leadership and Product Differentiation. “At Arla, we are striving to
create value through innovation and cost reduction. That is what will allow us to grow.” – Jesper Erichsen, CIO, Arla
Foods.
• Their Products are differentiated based on strong R&D expertise at Arla foods and are able to have low costs by being
Farmers Owned and through M&A.

• As Arla Foods is owned by Farmers an implication of it is that all farmer-owners are obliged to supply their entire milk
supply to Arla Foods, while Arla Foods is obliged to buy all its owners’ milk for the highest possible price.

• Arla Foods continuously seek growth opportunities, pushing for a sustainable market leadership, and improving value
creation through innovation and brand building.

• A disadvantage of farmer ownership is that Arla Foods is constrained in its ability to raise capital, as they primarily
need to rely on debt markets if they are in need of financing.

• On the other hand, as the farmer-owners are long-term oriented, Arla Foods has the freedom and flexibility to think
long-term, strategically.
Market Scope Strategy of Arla
The Milk Wheel
• Arla Foods adheres to a business model
called the milk wheel, which dictates
that an increasing milk pool fuels their
sales growth engine, which allows for
innovation and increasing value to the
farmers’ milk.
• With a mantra of “volume is king”, their
strategic focus has been securing larger
volumes of milk supply through merger
and acquisitions.
• Having secured a large milk pool, Arla
Foods now wants to build greater value
for that milk in the future.
The Strategy: Good Growth 2020
• Recent challenges in its core
markets have made Arla Foods
alter their strategic focus into
value-up rather than volume-up.
• Good Growth 2020, launched in
2016, lays out a 5-year road map
for Arla Foods that seeks to
increase the value generated for
their farmers’ milk by excelling in
eight product categories and
three global brands, focusing on
six regions, and winning as ONE
Arla.
The Strategy: Good Growth 2020
• Arla Foods is very strong in developing new products and has always had a broad product portfolio. However, with
changing consumer trends, Arla Foods has decided to focus its efforts on developing and offering products within
eight product categories that show the biggest opportunities for growth.
• Arla Foods wants to excel in these categories by building innovative products, a world-class supply chain, compelling
marketing, and strong partnerships.
• Whereas innovation and managing a lean supply chain are already some of their core competencies, marketing and
building relevant and strong partnerships still require attention if growth targets are to be reached by 2020.
• Having expanded rapidly since the merger in 2000, especially within the last decade, Arla Foods circled in on six
regions in 2015 in which they should champion the dairy industry.
• Given slow growth rates in Europe, the International region, exhibiting many high-growth markets, was set to drive
50% of the targeted growth in Good Growth 2020.
• Within Europe, competition is very fierce, and Arla Foods is convinced that to achieve its top-line growth target they
need to position the Arla® brand stronger in their core markets, namely the UK, Sweden, Denmark, Finland, Germany,
the Netherlands, and Belgium.
The Strategy: Good Growth 2020
• Good Growth 2020 represented an increased focus on ONE Arla Foods. Due to the many strategic mergers and
acquisitions made in the past two decades, Arla Foods has had a very fragmented organizational structure with
limited cross-country collaboration.
• ONE Arla entails a big structural change in the organization, with the purpose of uniting the company on three
levels, namely shared focus, aligned leadership, and aligned functions.
• A new executive management team consisting of seven people was formed in
• 2016 that built around specific functional areas, e.g. marketing and innovation, thereby creating a functionally
oriented organizational structure encouraging cross-country thinking. Within Europe, Arla Foods is currently
trying to build a pan-European Arla community in order to leverage synergies across countries.
The Strategy: Calcium Programme
• Good Growth 2020 is the right strategy for the industry and market trends around Arla Foods. However,
several realities are changing the context of the political, economic and social landscape that Arla Foods are
operating in.

• In 2018 they commenced a transformation programme, Calcium which will accelerate their strategy by
transforming the way they work, spend and invest.

• Calcium will strengthen thier bones, create efficiencies and release cash to reinvest in their growth.

• The Programme answers the questions of Why, How and What in their strategy.
The Strategy: Calcium Programme
The Why
This question defines the need to come up with Calcium Programme and the answers decide the success of their
overall strategy.

Brexit
The UK contributes 26 per cent of our revenue, which is a much higher exposure than our
competitors. The negative impact of GBP currency fluctuations since the announcement of Brexit
cost Arla approximately EUR 150 million.

Fat and protein prices

The last two years increase in commodity prices for dairy fat has reduced the relative
competitiveness of our branded high-fat products, costing approximately EUR 125 to 175 million in
relative performance to our competitors.

Cost consciousness
As a low margin business ongoing cost consciousness is a prerequisite to stay competitive and deliver on
our targets to our farmer owners.
The Strategy: Calcium Programme
The What

The Calcium transformation is more than just cost savings:

• Arla Foods is increasing its focus on the frontline of its business, where they are the
closest to their customers and consumers. They are at the heart of every decision
Arla Foods make.

• Their decision making is becoming quicker, more data driven, and more transparent
throughout the organization.

• Arla Foods is eliminating waste wherever it doesn’t add real value for the customers
and consumers.

• They are also eliminating complexity where it doesn’t add value. They are becoming
simpler and more streamlined, both in production and as an organization.
The Strategy: Calcium Programme
The How
Production
Procurement
We will create profound change at every site and in every role. We will shift from
The Procurement function has a stronger mandate to integrate experts and best
dairy structure efficiency to individual line efficiency. New transparency in data
practice into our buying decisions to secure compliance, maximize the value of
means our people will benchmark and optimize – line by line, week by week.
goods and services that we buy in Arla and to safeguard responsible sourcing.
Indirect spend
Innovation
New transparency of data has enabled us to challenge the way we spend money
Our process from idea to market will be simpler and shorter to capture new
and significantly reduce all spending that is not frontline focused. Going forward
opportunities faster. We will experiment more in the markets and scale successes
our people have better control of costs not related directly to our products – e.g.
quickly.
office equipment, IT, travel, consultants etc.
Range
Logistics
To reduce complexity in Supply Chain and scale our products’ bottom line impact,
New transparency in data will enable us to eliminate waste of finished goods and
we will share more products across markets. We will pick from a standard list of
optimise both the milk pick-up at the farms and the distribution to the customers
ingredients and meet a minimum volume target for new products.
– route by route – creating value for us and our customers.
Organization
Marketing
Our central functions have become smaller, so that we can increase focus on the
We will spend less on developing campaigns and more on reaching consumers.
frontline in our markets.
Our content will be developed cheaper, faster and better in new in-house digital
studios.
Retail promotions
Better data will enable us to optimize retail promotions for us and our customers
empowering Key Account Managers to make informed decisions on the spot.
 This section covers the Functional Strategies of Arla foods in the
areas of:
Functional 1. Capital Structuring

Strategy of 2. Marketing & Sales

3. R&D and IT
Arla Foods 4. Internationalization

5. Sustainability
Arla Foods Capital Structure Strategy
• Arla aims for a conservative capital structure matching that of a robust investment grade company.

• Arla has a strong core banking group based on long-term relationship banking.

• The group funding is obtained from diversified sources:

➢ Mortgage backed bonds

➢ Corporate bonds

➢ Supra-nationals

➢ Commercial paper

➢ Facilities with the core banking group.

• Funding and cash management is centralized at group level.

• Under the new capital structure 4.5 per cent (around double the previous amount) of Arla earnings will be invested in the corporation.

• Consolidation will increase Arla’s equity by approximately DKK 4‐4.5 billion over a six‐year period.

• The extra capital will allow Arla to raise connection with acquisitions with more ease and it will also be used in connection with investments
related to continued growth.
Arla Foods Marketing Strategy
• Arla’s marketing and sales organizations have focused on increasing volumes in profitable positions in both core markets and markets outside the EU.

• Arla has proactively made the decision to maintain their investments in marketing and innovation with the objective to push more milk into retail and
foodservice and reduce industry commodity sales.

• Arla is now also focusing on ecommerce and online sales of its branded products. It recently entered the e-commerce space by partnering with different
online retailers such as Amazon.

• Arla Foods has never pursued a homogenous brand communication strategy for the Arla brand across countries or sub-brands but has instead employed
more fragmented marketing strategies to leverage the sub-brands’ local strength.

• Arla Foods has primarily been selling to traditional retailers, especially supermarkets and hypermarkets. Sales through these constitute ~75% of Arla Foods’
revenue, with major clients including ICA, Lidl, Tesco, Aldi, Coop, to name a few. These retailers also own or distribute to smaller convenience stores.

• Arla Foods has never pursued a homogenous brand communication strategy for the Arla® brand across countries or sub-brands but has instead employed
more fragmented marketing strategies to leverage the sub-brands’ local strength. This, in turn, is extremely difficult and costly to manage. With the Good
Growth 2020 goal of building global brands, Arla Foods is determined to find a way of converging perceptions of Arla®, requiring scalable and innovative
brand communication solutions.
Arla Foods R&D and IT Strategy
Research Innovation

• Research and innovation is of fundamental importance to Arla Foods, and the company’s innovation range covers milk‐based products such as milks, yoghurts, desserts,
cheeses, butters, spreads, soups, sauces, milk powders and milk‐based food ingredients.

• Arla’s research and innovation activities are carried out at its three major innovation centers in Denmark and Sweden and two innovation satellites in United Kingdom and
Finland.

• Company’s research and innovation activities are organized into three interacting portfolio areas of research:

➢ Technological development

➢ New product development

➢ Radical innovation.

• Through these activities, Arla is providing the basis for competence development and knowledge transfer to the remaining innovation chain.

• Arla Foods sponsors and participates in a wide range of research projects.

• There are also several different types of collaborative partnerships that Arla engages in, including:

➢ Direct partnership between Arla and a research institution

➢ Projects where a major proportion of the funding comes from the Danish Agency for Science, Technology and Innovation within Food and Safety and the remainder derives
from participating research institutions and companies

➢ Projects where around half the funding derives from the Danish Dairy Board’s Research Fund and the remainder from public funds
Arla Foods R&D and IT Strategy
Research Platforms

• Arla Foods employs around 200 skilled individuals within the area of innovation that range from basic research to new product development.

• These research activities are organized within six major research platforms that represent significant elements in the milk value chain. These
include:

➢ Milk composition

➢ Flavor and functionality

➢ Food safety

➢ Consumer preferences

➢ Process development and control

➢ Wellbeing

• Each platform includes a research coordinator as well as key representatives from organizational units in Arla Foods.

• The research platforms value effective internal communication, agreement and coordination of research‐based knowledge and needs.
Arla Foods Internationalization Strategy
• For Arla, continued success demands strong growth, and that means opening up new markets in other parts
of the world along with the acquisition of other companies. This is because the growth potential of Arla’s
home market in Europe is limited due to slowing population growth and high local market share.
• Therein lies the fundamental challenge facing Arla that is to take its business blueprint and implement it
around the world. Differences in culture, legal systems and business environments–as well as integrating newly
acquired companies–all pose potential difficulties.
• Arla displayed rare clarity of vision when the company decided to transform itself. The company knew that it
needed a way to operate in a truly global manner, with a new business model that would enable it to integrate
acquisitions quickly and focus management’s time on new mergers and acquisitions and moving into new
markets.
• The One Arla Program is developed to achieve internationalization easily in the growing markets catering to all
the differences in culture, processes, customers and consumers mindsets.
Arla Foods Merger and Acquisitions Strategy
• Historically Arla Foods has been able to grow through merger and acquisitions. This has provided them with economies of
scale in production, a wider product portfolio, and a broad distribution network.

• In the 1990s, both Arla and MD Foods were looking for growth opportunities, and in order to advance an internationalization,
the two companies decided to merge to form Arla Foods in 2000. This became the world’s first cross-border cooperative.

• Since the merger, Arla Foods has managed to secure the fourth largest milk-pool in the world. From 2007 to 2016, Arla Foods
almost doubled its milk supply from 8 to 14 billion kilos, enabling them to pursue sales on a global scale.

• Arla Foods has since established a strong position in Europe by expanding to the UK, Germany, the Netherlands, and Finland
through mergers and acquisitions.

• Within the past few years alone, Arla Foods has undergone six mergers in Central Europe, the UK,

• and Sweden. Six years ago, Arla Foods further began establishing regional offices in China, South-East Asia, USA, and Nigeria,
thereby building a truly global presence.
 Arla Foods Merger and Acquisitions Time Line

In year 2000 the Danish MD Foods and the 2006 Arla bought the privately owned Dairy,
2004 Arla acquired National Cheese 2005 Arla and the Chinese dairy company
Swedish Arla ekonomisk Förening decided 2006 Arla bought the American cheese Tholstrup Cheese, adding the Castello brand
Company in Canada, and become a China Mengniu Company started a
to merge. This was the first large cross speciality dairy White Clover in Wisconsin, to the Arla brand history.2006 Arla
producer and distributor of cheese in all partnership in producing milk powder for
national merger in the Nordic dairy industry USA. announced the purchase of the privately
Canada. the Chinese market.
- only to see many more come after. owned Finnish dairy Ingman Foods Oy Ab.

2007 Merger between Arla and Express 2011 Merger between Arla and Hansa-Milch
2007 Arla Foods establishes new joint 2009 Arla bought the Dutch dairy Friesland 2010 Shareholders of Westbury Dairies Ltd
Dairies in the UK. The merger creates the eG from Germany, 670 active German
venture with Artis in Russia creating the Fresh Foods in Nijkerk, changing it's name announced joint venture with Arla Foods UK
UK's leading supplier of dairy products farmers became cooperative owners of Arla
new Russian company Arla Foods Artis LCC. to Arla Foods BV. plc.
under the name of Arla Foods UK plc. Foods a.m.b.a.

2012 Arla merged with the German dairy

company Milch-union Hocheifel MUH, and
2012 Arla signed agreements with China’s
British Milk Link. The mergers meant that
2011 EU’s competition authorities gave the leading dairy company China Mengniu Dairy
Arla Foods grew from 8,024 co-operative
go-ahead for Arla Foods’ acquisition of Company Ltd. and with the leading food and
owners in Denmark, Sweden and Germany
Allgäuland-Käsereien in Southern Germany. beverage company in China, COFCO
to 12,300 co-operative owners in Denmark,
Corporation.
Sweden, Germany, Belgium, Luxembourg
and the UK.
Arla Foods Sustainability Strategy
Leading the sustainability agenda

• Arla operates its business in a sustainable and responsible manner, based on its Code of Conduct. At Arla, they believe
sustainability and profitability go hand in hand, and that their dedication to being responsible will benefit their business.

• The core of their sustainability strategy is their respect for human rights, and they focus their efforts on the areas where they
have the biggest impact:
1. Access to nutritious dairy products
2. Inspiring good food habits and
3. Improving the environment.

• With their sustainability efforts, they contribute to the UN’s Sustainable Development Goals (SDGs).
Financial Overview
SWOT Analysis of Arla Foods
Strengths
• Collective ownership by over 12,000 farmers

• Innovation in dairy technology, particularly in nordic countries

• Existing, proven marketing plan with variety of dairy goods

• Established presence in worldwide developed locations- Arla Foods has extensive dealer network and associates network that not only help in
delivering efficient services to the customers but also help in managing competitive challenges in Strategy & Execution industry.

• Able to hit different price points with different products and different locations- Arla has built expertise at entering new markets and making
success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it
operates in.

• Committed to automated labor- which has lead to decreasing labor costs

• Merger with MUH and British Bink- making Arla the sixth largest milk producer

• Increased net profit- from 2006-2018 steadily (+133%)

• Arla strategic innovation center- has a diverse pool of employees representing many of their markets

• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain
bottlenecks.
Weaknesses
• New markets have lower purchasing power compared to developed markets

• Business structure is very spread out, could create disconnect between specific areas

• Arla has much less milk production in developing countries, where over 80% of future growth is projected to come from

• Lack of diversity with senior executives, almost all Danish or Swedish

• Disconnect- Arla wants to consolidate brands, but at the same time, they demand revenue comes from new product launches

• Business Model of Arla Foods can be easily imitated by the competitors in the Dairy industry.
Opportunities
• New trends in the consumer behavior can open up new market for the Arla . It provides a great opportunity for the organization to build new
revenue streams and diversify into new product categories too.

• The new technology provides an opportunity to Arla to practices differentiated pricing strategy in the new market. It will enable the firm to
maintain its loyal customers with great service and lure new customers through other value oriented propositions.

• The market development will lead to dilution of competitor’s advantage and enable Arla to increase its competitiveness compare to the other
competitors.

• New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This
investment has opened new sales channel for Arla. In the next few years the company can leverage this opportunity by knowing its customer
better and serving their needs using big data analytics.

• Local Collaboration - Tie-up with local players can also provide opportunities of growth for the Arla Foods in international markets. The local
players have local expertise while Arla Foods can bring global processes and execution expertise on table.

• Increasing customer base in Developing Markets - There is an absolute potential in developing economies for dairy products and production.

• Trend of customers migrating to higher end products - It represents great opportunity for Arla Foods, as the firm has strong brand recognition in
the premium segment, customers have experience with excellent customer services provided by Arla Foods brands in the lower segment. It can
be a win-win for the company and provides an opportunity to increase the profitability.
Threats
• Changing demographics - As the baby boomers are retiring and new generation finding hard to replace their purchasing power. This can lead to
higher profits in the short run for Arla Foods but reducing margins over the long run as young people are less brand loyal and more open to
experimentation.

• Changing political environment with US and China trade war, Brexit impacting European Union, and overall instability in the middle east can
impact Arla Foods business both in local market and in international market.

• Competitors catching up with the product development - Even though at present the Arla Foods is still leader in product innovation in the
Strategy & Execution segment. It is facing stiff challenges from international and local competitors and from private labels also.

• Shortage of skilled human resources - Given the high turnover of employees and increasing dependence on innovative solution, Arla can face
skilled human resources challenges in the near future.

• Saturation in urban market and stagnation in the rural markets - For Arla Foods this trend is an ongoing challenge in the Strategy & Execution
segment.

• Matching Structure With Strategy to serve the rural customers than urban customers given the vast distances and lack of infrastructure.
Nestle
Market Scope Strategy of Nestle
• Nestle describes itself as a food, nutrition, health, and wellness company. They believe strengthening their
leadership in the market is the key element of their corporate strategy.

• Nestle business level strategy is focused on cost leadership and differentiation with wide range of products
and low cost operators.

• Nestle strategic leadership is to force the business to become more efficient, to create a regional
manufacturing network, integrate the company’s business on a global scale and to reduce marketing
expenditures by exploiting the synergies between brands.
Nutrition, Health and Wellness strategy
• Nestle’s success is built on its Nutrition, Health and Wellness strategy. Food and beverages are core to Nestlé.
They aim to provide the tastiest and healthiest choices, for all times of the day and for all stages of life,
delivered in a convenient manner.

• They aim to capture premiumization opportunities and, at the other end of the spectrum, offer affordable,
high-quality nutrition.

• They add value to their brands and products through meaningful differentiation and innovation.

• They do this by continually improving the taste, convenience and nutritional qualities of their products.

• They are also well-positioned to build and share nutrition knowledge from the first 1000 days of life through to
healthy aging, and benefit from increased interest in nutrition to support good health.
 This section covers the Functional Strategies of Nestle in
the areas of:
Functional 1. Capital Structuring

Strategies of 2.
3.
Marketing & Sales
R&D and IT
Nestle 4. Internationalization
5. Sustainability
Nestle’s Capital Structure Strategy
• Early in 2017, the company’s management, together with the Nestlé Board of Directors, initiated a comprehensive review of the
company’s capital structure and priorities to support and enhance its ability to deliver on its value creation model.

• Nestlé’s financial strategy aims at striking the right balance between growth in earnings per share, competitive shareholder returns,
flexibility for external growth and access to financial markets.

• Nestlé determined that capital spending will be focused particularly on advancing high-growth food and beverage categories such as
coffee, petcare, infant nutrition and bottled water, as well as expanding its presence in high-growth geographic markets.

• In the context of low interest rates and strong cash flow generation, share buybacks offer a viable option to create shareholder value.
Therefore, as a result of its review, the Board of Directors approved a share buyback program of up to CHF 20 billion, to be completed
by the end of June 2020. Should any sizeable acquisitions take place during this period, the share buyback program will be adapted
accordingly.

• The volume of monthly share buybacks will depend on market conditions but is likely to be backloaded in 2019 and 2020 to allow the
pursuit of value-creating acquisition opportunities. Based on current projections, the company expects a net debt to EBITDA ratio of
circa 1.5 in 2020.

• The company is committed to maintaining its sustainable dividend practice.

Nestle’s Marketing and Sales Strategy
• As the function driving Nestle’s brand-building efforts, Marketing is right at the heart of what they do.

• “Brand Building the Nestlé Way” is a distinctive process that sets their marketing function apart in the industry – from both a
commercial and a career point of view.

• Their Marketing team provides an end-to-end marketing service reflected in their three key areas:

1. Brand management

2. Communications

3. Consumer insight.

• Importantly, marketing is not an isolated activity – their focus on the consumer ensures that they provide a seamless service,
working hand-in-hand with their Customer & Sales teams.

• Through science-based nutrition products and services, Nestlé helps enhance the quality of people's lives by supporting
health and providing care for consumers with special needs.
Nestle’s Marketing and Sales Strategy
• Fast-moving consumer goods (FMCG) have made them the business they are today. They sell over a billion
FMCG units every day, generating sales from 118 countries across the world. Driving all this forward is their
Customer and Sales team.

• Nestle has a very varied brief. It handles category and shopper management, customer relationships, route to
market strategies, field sales activities and their customer-facing supply chains.

• All of these areas are focused on delighting its consumers and making sure its products are where they want
them when they want them.
 Nestle’s R&D and IT Strategy
Nestlé Research Center Nestlé R&D Network
• At the heart of scientific research in Nestlé lies the Nestlé Research Center • The Nestlé Research Center does not work alone. It is part of the worldwide Nestlé R&D
(NRC), the world's largest private food nutrition research institute. Network, which translates science and technology into products, business and systems.
• the scientific excellence and technical knowledge of the Nestlé Research Center • This dynamic network is comprised of over 5,000 people, including leading scientists,
helps fulfill Nestlé's vision of Good Food, Good Life for all consumers. technicians and engineers.
• Research at the Nestlé Research Center encompasses the nutritional value and • These centers cultivate diverse research and development expertise to respond to ever-
sensory characteristics of products, commercial feasibility and food technology, changing consumer and business needs.
along with consumer behavior, nutrition needs and social aspects of food and
eating.
• At the forefront of all of Nestlé’s research activities is the commitment to utmost
quality and safety.
External Partnerships
• NRC’s current scientific research axes include:
• In addition to the Nestlé internal R&D network, NRC collaborates with a wide-reaching
1. Nutrition & Health network of external partners such as universities, private research institutes, hospitals and
2. Food Science & Technology start-up companies.

3. Quality & Safety • The value of such partnerships facilitates access to external scientific expertise, technologies
and early stage innovation to complement Nestlé's internal research and development
4. Sensory & Consumer Science activities.
Nestle’s Internationalization Strategy
• The driving force behind the decision of expanding its market share in emerging market is simple, as the
population grows and government decisions favoring market economies brings attractive business
opportunities for public living at intermediate income.
• Nestlé uses the strategy which correlates the ratio of increase in income to use of branded food products,
which means as a person earns more and has less time for making food in his/her home, they will automatically
substitute for branded products.
• In general the company’s strategy has been to enter emerging markets early before its competitors and build a
substantial customer base by selling products which suit the local population such as infant formula, milk, and
noodles.
• As the income level rises in each niche market, Nestlé introduces an upscale version of the same brand to
increase its profit level. Although Nestlé has become a global brand, it uses local identity to gain exposure in
local markets.
• The execution of the strategy matches the planning of the strategy which is to plan globally and implement
locally. Nestlé gives autonomy to its local branches based in different countries to make pricing decisions, and
distribution decisions.
 Nestle’s Mergers,
Joint Ventures and
Investments

• 1905 Nestle Merger with

Anglo-Swiss Condensed
Milk Company
• 2002 Nestle Joint Venture
with Fonterra (Dairy
Partners Americas)
• 2019 Nestle and R&R
Create Froneri joint
venture
Nestle’s Sustainability Strategy
• Nestle defines sustainable development as the process of increasing the world’s access to higher quality food,
while contributing to long term social and economic development, and preserving the environment for future
generations.

• In the 135-year life of Nestlé, its fundamental approach to business has been the creation of long term
sustainable value for its consumers, customers, employees, shareholders, and society as a whole. The Nestlé
Corporate Business Principles state openly that it favors long term business development over short term
profit.

• While they are committed to making a healthy profit, they instruct managers not to do so at the expense of
long term, sustainable development.
Nestle’s Sustainability Strategy
Packaging and the environment
• Nestle strives to reduce the environmental impact of its packaging while ensuring that packaging protects the products effectively.
• Nestlé also promotes recovery and recycling, using recycled materials wherever possible. They choose materials with an inherently
lower impact on the environment (such as materials from sustainably managed renewable resources).
• In considering the impact of packaging on the environment they look at several indicators including carbon footprint, water usage,
non-renewable energy use and solid waste generation.
Product labelling
• In accordance with their policy on environmental sustainability, which was first established in 1991, they are committed to providing
science-based, meaningful and verifiable environmental information about their products and activities.
• Nestle favors full product lifecycle consideration, addressing all of the most impactful elements along the supply chain, including the
product's use and end-of-life treatment. They also support the establishment of one internationally harmonized methodology,
preferably through the International Standards Organization (ISO).
• Nestlé is a member of the ISO Water Footprint Working Group (ISO140046: ISO/TC207/SC5/WG8), which first convened in 2009.
Financial Overview
Product category and operating segment
review
SWOT Analysis of Nestle
Strengths
• Reputed brand name – Nestle is the most renowned brand in the world. It has developed a respected reputation in the food
and beverages sector offering high-quality products for everyday use across the globe.

• Globally recognized brand – Through its effective advertising and branding strategies, it has created significant awareness
and developed a successful brand image around the world. According to the Interbrand, Nestle is among the world’s largest
corporations and is ranked at 62th position in 2018 list.

• Highly diversified company – Nestle sells its products in 189 countries Instead of relying on a few markets, it has captured the
sizeable market in a lot of developed and developing countries to earn most of its revenue. Its leading markets include the
US, China, France, and Brazil. In 2017, It generated CHF 26.7 billion from the US market alone.

• World’s most valuable brand – According to 2018 Forbes Global, Nestle is among the top as the world’s most valuable
company in regards to highest revenue, profits, assets, and market value.

• Extensive product portfolio – Nestle owns more than 2000 brands globally and renovated over 8000 products for nutrition
and health considerations, according to its Annual Review 2017. It is one of the worlds’ biggest companies with the broadest
product portfolio.
Strengths
• Well-established relationships and popular brands– Nestle has some of the world’s most recognized brands under its name such as Nescafe, Kit
Kat, Gerber, Milo, and Maggi. Besides, it has well-established relationships with other trusted and powerful brands like Colgate Palmolive, Coca
Cola, General Mills, and L’Oréal.

• Efficient R&D system – Nestle has the world’s largest food and nutrition research organization with 21 R&D centers Its research and
development capability is one of its key competitive advantages. There are more than 5000 employees involved in R&D operations. It spent
nearly 1.72 billion Swiss Franc on R&D in 2017.

• Environmental sustainability practices – Nestle puts substantial efforts in environmental sustainability practices and take innovative initiatives in
improving its quality of products. It optimizes advanced solutions to reduce waste, water usage, non-renewable energy use, and packaging
material usage. In 2017, 253 of Nestle factories reached zero waste production. To communicate sustainability benefits with its customers and
keeping the environment clean, Nestle launched a free mobile app that helps people to recycle waste packaging material correctly.

• Large distribution system – Nestle owns an extensive and diversified distribution system that is not only penetrated in urban areas but also rural
regions. It has adapted local distribution methods and decentralized approach to run the business efficiently in respective countries. Nestle has
strong relationships with suppliers, retailers, vendors, and distributors.
Weaknesses
• Price fluctuations by retail giants – Nestlé’s grocery sales are achieved majorly through huge retail giants like Walmart, Tesco,
and Kroger. Any reduction or increase in prices by these retailers can affect Nestlé’s sales.

• Span of control and organizational structure –Nestlé is organized in a matrix structure. That means a large number of brands
are under the same umbrella group which makes it somewhat challenging to manage such a large number of individual
brands can often result in discord and conflict of interest.

• Water controversy – Recently, Nestle was accused of illegally pumping millions of liters of water in 6 nations where residents
are deprived of drinking water.

• Social criticisms –Nestle has become a target of media attention many times. The claim to privatize water,
misleading labeling, and a lawsuit for chocolate making using child and slave labor are some of the examples that have to
weaken its market reputation.

• Maggi Noodles controversy – In 2017, Nestle failed to clear a laboratory test in India. This created a publicity hype as people
boycotted Nestle, leading to the loss of 80% of market share in the country. Nestle claimed ‘No added MSG’ in the Noodles
packets. However, 1000 times more lead was found in the product after testing.
Opportunities
• Venturing small food start-ups – Nestle has a fantastic opportunity to grow the number of small food start-ups under its popular brand name.
Nestle can also collaborate with the new start-ups to promote its brand name.

• Online shopping – Nestle has a remarkable opportunity to boost its e-commerce sites and online shopping platform. A very few CPGs are offering
online services to make the shopping experience more comfortable and pleasant. Although Nestle has its online stores in a few countries,
expanding its online services to more areas will prove a rewarding decision for the company.

• Market penetration for breakfast cereals – Nestlé’s cereals and oats market have shown fast growth in recent years. Thus, penetrating this
market more would be highly lucrative for the company.

• Expanding ready-to-drink tea and coffee market – The demand for tea and coffee is continuously on the rise, rendering a profitable opportunity
for Nestle to groom this market more.

• Partnerships – Strategic alliances with other food and beverage giants are also a great opportunity for the company to increase its revenues and
profits.

• Authentic labeling – Nestle has already been criticized for giving misleading nutritional information on its labels. So, there’s an opportunity to
improve its practices by giving trustworthy information and accurately labeling its products.
Threats
• Illegal rainforest destruction controversy – In 2017, Nestle was alleged of involvement in the destruction of Sumatra’s last
tract of rainforest. It faced severe criticisms from NGOs and environmentalists in this regard.

• Water scarcity –Nestlé’s production is highly dependent on water usage. Accessing the clean water through less costly
sources has become difficult for the company due to many reasons. These include increasing population, climate change,
growing demand for food and water, increasing pollution, water wastage, and overexploitation of resources.

• Rising competition – Many CPG companies like Mondelez and Unilever offer similar food and beverage products. It is hard for
Nestle to compete in such a situation where the substitute products are easily accessible.

• Government regulations and prices – Government regulations can affect the business operations of Nestle.

• Price of commodities: The increasing prices of commodities force the company to increase the prices of its products. It will
lead to sales reduction as consumers can switch to other brands which are available at low costs.
Fonterra
Market Scope Strategy of Fonterra
• Its two distinct businesses structure, specialty ingredients and consumer milk products provides a hedge
against fluctuating international dairy prices.

• Fonterra uses its expertise in dairy technology for creating value from milk as both ingredients and consumer
dairy products.

• Fonterra views milk with sophistication, seeking to lead the race to develop its nutritional potential by meeting
the needs of an increasingly health-conscious world.

• To develop specialized products, Fonterra uses a health and nutrition team that focus on the unique health
benefits of milk-derived bio actives.

• Fonterra’s focus had always been on Product Differentiation and Market Leadership through innovation.
Fonterra’s Ambition and V3 Strategy
• Fonterra is now strategizing to move in to the Cost
Leadership position also.
• They do this through their strategy of converting more milk
into higher returning products which they call as V3.
• The ‘volume, value and velocity’ strategy builds on the core
building blocks of integrated supply, efficiency, global
number one supplier of milk and trader in dairy products.
• They are working towards three horizons and have made
progress on all three this year.
• To achieve their ambition they have defined three strategic
horizons:
1. Strong V3 Co-Op
2. Innovative Co-Op
3. Sustainable Co-Op
 This section covers the Functional Strategies of Fonterra
in the areas of:
Functional 1. Capital Structuring

Strategies of 2.
3.
Marketing & Sales
R&D and IT
Fonterra 4. Internationalization
5. Sustainability
Fonterra’s Capital Structure Strategy
• The current capital structure evolved from the two co-operatives that preceded Fonterra.

• As a core feature of the cooperative business model, farmers in the Fonterra cooperative were required to hold shares in a
fixed proportion to the amount of milk that they supplied to the cooperative each year. As such, whenever a given farmer
produced less in a particular year, Fonterra was obliged to redeem the farmer’s shares, in return for the associated capital
stake.

• Aggregated over all farmers, this corporate mechanism exposed Fonterra’s balance sheet to the fluctuations associated with
milk production (which in turn depends on volatile factors such as the price of milk on commodity markets, and weather
trends).

• In 2007, Fonterra’s management articulated two key objectives in relation to Fonterra’s capital structure, namely:

1. To decouple the firm’s capacity to raise capital from the domestic production of milk in New Zealand; and

2. Stability in the firm’s equity base (i.e., addressing redemption risk).

• The Share holding can only be done by farmers in the past and no one else. However, the strategy has changed and now the
shareholding and trading is done among all the owners (Farmers & Non-Farmers).
Fonterra’s Marketing and Sales Strategy
• Fonterra has introduced its Power Brands Strategy to build its brands and markets.

• The Power Brand strategy - a global Fonterra strategy which was rolled out first in Malaysia
for the Asia/Middle East region - basically involves concentrating on its so-called four power
brands:

1. Anmum

2. Fernleaf

3. Anlene

4. Foodservices.

• They are growing their market share through a lot of marketing activities such as Nutricheck,
a free Fernleaf nutritional check-up run in supermarkets and shopping malls.

• Since 2008, Fonterra has increased its advertising and promotion (A&P) investment behind
that smaller number of power brands by a thumping 50% despite the recession.

• As for its food services business, which caters to the bakery and HORECA (hotels, restaurants
and cafes) channels, Fonterra strategies to hold its feet by using the sales channel.

• Currently, Fonterra is focusing on understanding the needs of the customers and consumers.
They are looking to bring more solutions, so it’s less and less about selling dairy products and
much more about understanding the needs of the bakers and chefs and giving them total
solutions.
Fonterra’s R&D and IT Strategy
• Over the past 10 years, Fonterra’s average investment in R&D has been
approximately 0.6% of its net sales.

• However, the spending is below the industry’s median spending.

• Fonterra typically invests in sales, marketing and distribution each year more than
it has invested in R&D over the past 10 years.

• Fonterra’s investment in R&D has declined over the last decade. On average,
Fonterra has invested approximately $90 million per annum in R&D, or $900
million in total over the last 10 years.
Fonterra’s Internationalization Strategy
• Fonterra’s strategy towards internationalization is based around Joint Ventures with other companies around the world.

• Fonterra established several strategic alliances and partners to increase efficiency and flexibility in its global supply chain.

• Fonterra and Dairy Farmers of America (DFA), the largest milk-collecting cooperative in the United States, formed a joint
venture company called DairiConcepts which combines DFA ‘s manufacturing sites with Fonterra 's technological innovations.

• DairiConcepts both strengthened Fonterra’s position in the U.S. market and offered the cooperative the ability to better
exploit its new opportunities.

• In addition to improving efficiencies in its South American operations, Fonterra established a joint venture with Nestlé to form
Dairy Partners Americas. Consisting of 3,400-strong workforce throughout the Americas, with more than two thirds of them
ex-Nestlé staff, Dairy Partners Americas has been successfully implemented in Argentina, Brazil and Venezuela.

• These and other partnerships provide alternative sources of raw milk for its ingredients business, enable optimization of
Fonterra's production plan and inventory levels, and ultimately facilitate meeting customer demand in all regional markets.
 Fonterra’s Sustainability Strategy
Fonterra has recently published its first
Sustainability Report in late 2017, which
outlines its approach to environmental
sustainability:
1. Improve the health and biodiversity of
New Zealand land and waters by
reducing the impacts of farming and
manufacturing and working in
partnership with others.
2. Lead the transition to a low-carbon
future by investing in innovation and
infrastructure to remove greenhouse
gas emissions from our supply chain.
3. Meet the growing nutritional demand
through improvements in productivity
and minimizing waste from farm to
consumer.
Financial Overview
SWOT Analysis of Fonterra
Strengths
• Have the stable and secures supply of the milk resources in long term even the global demand is outstripping supply because of the uniqueness shareholder relationship within the farmer

• Due to the Fonterra is merging from 2 large of company of the large company in New Zealand so they pursue growth of the economic scale with the various resources.

• New Zealand is a higher productivity environmental for daily product.

• Large number expertise worker within the industry in the company.

• Highly skilled workforce through successful training and learning programs. Fonterra Shareholders' Fund is investing huge resources in training and development of its employees resulting in a workforce that is
not only highly skilled but also motivated to achieve more.

• Highly successful at Go To Market strategies for its products.

• Automation of activities brought consistency of quality to Fonterra Shareholders' Fund products and has enabled the company to scale up and scale down based on the demand conditions in the market.

• Superb Performance in New Markets – Fonterra Shareholders' Fund has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue
stream and diversify the economic cycle risk in the markets it operates in.

• Successful track record of integrating complimentary firms through JV. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable
supply chain.

• Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how
he/she can extract the maximum benefits out of the products.

• Successful track record of developing new products – product innovation.

Weaknesses
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.

• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Fonterra Shareholders' Fund
needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.

• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Fonterra Shareholders' Fund is successful at integrating small
companies it has its share of failure to merge firms that have different work culture.

• The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly
defined which can lead to the attacks in this segment from the competitors.

• High attrition rate in work force – compare to other organizations in the industry Fonterra Shareholders' Fund has a higher attrition rate and have to spend a lot more
compare to its competitors on training and development of its employees.

• Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Fonterra
Shareholders' Fund

• The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Fonterra
Shareholders' Fund has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
Opportunities
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Fonterra Shareholders' Fund’s products thus providing an opportunity
to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.

• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Fonterra Shareholders' Fund.

• New trends in the consumer behavior can open up new market for the Fonterra Shareholders' Fund . It provides a great opportunity for the organization to build new
revenue streams and diversify into new product categories too.

• Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better
Oil drilling machines.

• New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Fonterra
Shareholders' Fund to drive home its advantage in new technology and gain market share in the new product category.

• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new
products segments. This should open a window of opportunity for Fonterra Shareholders' Fund in other product categories.

• The market development will lead to dilution of competitor’s advantage and enable Fonterra Shareholders' Fund to increase its competitiveness compare to the other
competitors.

• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Fonterra Shareholders' Fund to
increase its profitability.
Threats
• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .

• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the
international sales.

• Liability laws in different countries are different and Fonterra Shareholders' Fund may be exposed to various liability claims given change in
policies in those markets.

• Rising raw material can pose a threat to the Fonterra Shareholders' Fund profitability.

• The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of
the company in short to medium term.

• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.

• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of
Fonterra Shareholders' Fund

• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
All Three Together
Market Scope

Arla Foods Nestle Fonterra

Arla’s Focus is on Cost Nestle’s Focus is on Fonterra’s Focus was

Leadership and Product Cost Leadership and on Product
Differentiation. Product Differentiation. differentiation only in
the past but now it is
shifting towards Cost
Leadership.
Functional
 Capital Structure
Arla Foods Nestle Fonterra

Arla’s Capital Structure is based on financing Nestle’s Capital Structure is diversified and Fonterra’s capital came from farmers only in
by global and is focused around growing value the past but now they are moving global in
for their owners. the trading market.
➢ Farmers’ Owned

➢ Mortgage backed bonds

➢ Corporate bonds

➢ Supra-nationals

➢ Commercial paper

➢ Facilities with the core banking group.

The focus is to generate value for farmers.

 Marketing and Sales

Arla Foods Nestle Fonterra

➢ Brand management ➢ Focus on Power Brands
➢ Going Digital
➢ Communications Building
➢ Targeting large retail stores.
➢ Consumer insight. ➢ High investments in marketing
➢ Brand Building and Sales
➢ Online Sales
➢ Marketing around consumers’ ➢ Targeting HORECA and Cafes.
needs
➢ Consumer insight

➢ Alibaba Stores (Hema)

 R&D and IT
Arla Foods Nestle Fonterra
1. Research Platform 1. Research Centers 1. Declining investment in
2. Research Centers R&D.
2. External Partnerships
3. Partnering up with 2. Skilled Research Personnel
3. R&D Network
universities
4. Heavy Investments in R&D
 Internationalization
Arla Foods Nestle Fonterra
New Markets entry via Merger New Markets Development by New Markets entry via Joint
and Acquisitions mainly. going Blue Ocean and targeting Ventures and Partnerships mainly.
lower end consumers.
 Sustainability
Arla Foods Nestle Fonterra
1. Conserving Water 1. Conserving Water 1. Conserving Water

2. Low Carbon Emissions 2. Low Carbon Emissions 2. Low Carbon Emissions

3. Reducing Waste 3. Reducing Waste 3. Reducing Waste

Performance and
Ratio Analysis
2018’s
performance of
Fonterra, Nestle
and Arla
Respectively
Revenue and Gross Profit
Arla
Arla Nestle Fonterra

Net
Sales 11,675,843 10,566,942 20,438,000
(USD)
Nestle
Gross
2,262,000 2,333,000 3,159,000
Profit

Fonterra
EBIT, Sales and Admin Costs
Arla Fonterra

Arla Nestle Fonterra

Gross
Nestle Profit
2,262,000 2,333,000 3,159,000

Selling
and
Admin
17% 17.9% 8%
Costs
Maturity-Competitive Position Matrix

Introduction

Industry Maturity
Growth Arla (Hold Fonterra
Share) (Selectively
Invest and build Yellow: Arla
Share) Blue: Nestle
Shakeout Orange: Fonterra
Maturity Nestle (Grow
with Industry)
Decline
Strong Average Weak
Competitive Position

• The Basic Dairy market is at the maturity stage, however, the value added dairy is on the growth stage.
• Considering the product line of all the three companies, Arla and Fonterra are in the growth stage while Nestle is in the
maturity stage.
• The next move from Fonterra would be entering in to new markets with new capital structure and Partnerships.
• We believe, Nestle would not go directly in to value added dairy, however, Acquisitions seem to likely happen.
Arla and Industry
 1. Excellent R&D department: R&D helps in constantly finding healthier and tastier products for consumers.
2. Consumer engagement: Showing that the consumer is important is a key for success. Well-established brands
can benefit of high market share also because of their consumer engagement and keep its importance at the
core of the business.

Critical 3. Geographic presence: Successful firms are present all around the world and compete increasingly against each
other to gain market share in every country.

Success 4. Large product portfolio: Offering a big variety of products is important to be successful. Any firm can
substitute whatever product in the market with its own one. It is important to target profitable segments and
Factors apply a heavy and specific marketing strategy.
5. Consumer Behaviour: With a fast-changing sociocultural behaviour and ageing population, it is crucial to
innovate products and adapt them to the market. Consumers look for the healthiest and cheapest solutions.
6. Suppliers Relationships: Farmers will have vested interest due to continued co-operative structure.

Critical Success Factors in Dairy

Medium/Large
Brand Portfolio
Customer & Consumer
Good/Excellent Geographic and Well- Suppliers
Consumer Behavior and
R&D Presence Positioned Relationships
Engagement Prices
Products through
marketing
Arla’s Response to Industry Requirments
• Farmers Owned: Arla is completely owned by around 11,200 in 7 countries farmers who are the very essence of the company and Dairy
supplies. This way, the milk supply is expected to be constant and grow in the future.

• Geographic presence: Arla foods is operating at 30 countries with over 19,000 employees. The company is comprised of around 13,000
farmers who are the actual owner of the company.

• R&D: Arla has Innovation Centre, along with product development teams in the UK, Sweden, China, Germany, Netherlands, Finland and the US.
They do this with state-of-the-art science and consumer labs and a 2000 m2 pilot plant. Another initiative is Arla Food for Health, which was
founded in the spirit of exploring the competences between the four stakeholders to carry out best-in-class dairy health and nutrition
research and become a platform for knowledge sharing, training and education.

• Diversified portfolio: Arla has more than 30 brands covering all the dairy categories ranging from Milk, Cheese, Butter, Cream, and
Yoghurt. Its product profile has more than 80 products and 438+ SKUs. The product range is enough to meet the dairy requirement of
people around the globe.

• Brand reputation: Arla sets it self to be the best dairy provider and it is well received specially in Europe and Middle East. Its strong
brand image is one of the reasons behind its higher sales.
Conclusive Remarks
• Arla’s Strategy is at par with its competitor however, Arla’s approach to internationalization and emerging
markets is better than Fonterra’s.

• When compared with nestle, Arla boasts huge product line in dairy segment but has not been able to enter in
to emerging economies like India and Pakistan unlike Nestle.

• All the players under comparison have aggressive approach towards marketing and sales, however, Nestle’s
approach is differentiated based on its early customer development.

• When considering industry success factors, Arla is going in the correct direction.

• All the competitors are working hard to attain Cost Leadership and Product Innovation.

• They all are working on achieving efficiencies in their supply chains and production processes.
 • https://www.nestle.co.za/aboutus/missionvision

• https://strategicmanagementinsight.com/mission-statements/nestle-mission-statement.html

• http://blueoceanuniversity.com/frontpage/portervaluechain/12894-nestle-s-chariman

• https://www.nestle.com/asset-library/documents/library/documents/corporate_social_responsibility/nestle-csv-report-mar2008-en.pdf

• https://jobs.nestle.com/en/career-area/supply-chain-procurement

• https://www.greenbiz.com/news/2006/05/14/nestl%C3%A9-corporate-citizenship-and-value-chain

• https://www.nestle.com/asset-library/documents/jobs/the_nestle_hr_policy_pdf_2012.pdf

• https://www.nestle.com/randd/technologies

• https://www.interbrand.com/best-brands/best-global-brands/2018/ranking/

• https://blog.euromonitor.com/podcast/health-wellness-market-competitive-landscape-2017/

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• https://www.journaldairy.com/organic-dairy-products-market-competitive-analysis-by-2025-arla-foods-parmalat-canada-dean-foods-lactalis-group-fonterra-the-kraft-heinz-company-sancor-frieslandcampina-and-unilever-041439/

• https://www.arlafoods.co.uk/overview/news--press/2015/pressrelease/new-strategy-to-take-arla-into-next-decade-1270301/

• https://www.arla.com/about-us/news-and-press/2015/pressrelease/new-strategy-to-take-arla-into-next-decade-1269278/

• https://fooddrinkeurope-effat-toolbox.eu/

• https://www.arlafoods.co.uk/brands/all-our-brands/

• https://www.arlafoods.co.uk/overview/news--press/2015/pressrelease/new-strategy-to-take-arla-into-next-decade-1270301/

• https://ebha.org/public/C7:paper_file:142

• https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Technology/gx-cons-tech-sap-arla-foods-financials.pdf

• https://www.arla.com/food-for-thought/

• https://www.arla.com/101cheesesandwiches/

• https://www.arla.com/choose-goodness-breakfast/

• https://www.arla.com/mightymilkbar/

• https://www.arla.com/company/farmer-owned/

• https://www.arla.com/our-brands/all-our-brands/

• https://www.arla.com/inspiration/

• https://www.arla.com/milk-and-coffee/

• https://www.arla.com/milk-and-tea/

• https://www.arla.com/company/visit-a-farmer/

• https://www.arla.com/company/responsibility/

• https://www.arla.com/company/strategy/

• https://www.arla.com/company/research-and-innovation/

• https://www.arla.com/company/management/

• https://www.arla.com/company/investor/

• https://www.arla.com/company/news-and-press/latest-news/

• https://www.arla.com/company/procurement/

• https://www.arla.com/company/contact/