Nestlé Provides Affordable Nutrition to Emerging Consumers

The company stated that it is expecting PPPs to generate worldwide sales of around USD 20 billion over the coming years, with Indonesia being one of the fastest growing markets in South-East Asia.

20 Apr 2010 --- Nestlé reaffirmed its commitment to the “Popularly Positioned Products” (PPPs) business model as a key driver for the company’s future growth. PPPs meet the specific needs of around 3 billion consumers with lower income levels worldwide by offering them high-quality, nutritionally enhanced products at affordable prices. At a media conference in Jakarta, the company stated that it is expecting PPPs to generate worldwide sales of around USD 20 billion over the coming years, with Indonesia being one of the fastest growing markets in South-East Asia.

The PPP business model is based on in-depth knowledge of the needs of emerging consumers, many of whom are entering into the cash economy and buying branded goods for the first time. As such, PPPs are adapted in terms of nutritional composition, price, accessibility and format to meet their specific requirements. Arshad Chaudhry, President Director of Nestlé Indonesia, said: “The benefits of PPPs are threefold: they help deliver a balanced nutritional diet for emerging consumers, generate profitable growth for Nestlé, and contribute to the economies of emerging countries such as Indonesia and their population. PPPs are defined as one of Nestlé’s main growth drivers for the years to come. The Nestlé Group is expecting to reach global PPP sales of around USD 20 billion over the coming years.”

In terms of nutritional value, PPPs are specifically designed to address the most common micronutrient deficiencies prevalent amongst emerging consumers: around 40% of the Indonesian population consume less than 50% of the recommended daily amount of vitamin A and iron. Therefore, products such as Nestlé IDEAL milk powder and Koko Krunch have been fortified with iron, calcium, and vitamins A, C, and D. In order to guarantee their affordability, PPPs are developed in a way that enables consumers to buy them on a regular basis; furthermore, they are manufactured from local raw materials to minimize value chain costs. In the case of Indonesia, Nestlé procures milk for its Keyajan factory from more than 30,000 milk farmers in East Java who are provided with technical assistance, helping them to increase the quality, quantity and efficiency of their fresh milk production. In order to reach out to emerging consumers, Nestlé Indonesia uses a variety of distribution channels covering more than 1 million outlets across the country, including street markets and mobile street stalls. Consequently, PPPs are a source of income for individual traders and “warung” owners and lead to the creation of local jobs.

Arshad Chaudhry added: “PPPs make a big difference in a country like Indonesia, where better nutrition positively impacts not only the health, development and education of lower-income consumers but also the local economy. PPPs are a clear expression of the principle of Creating Shared Value, which is part of our business strategy: for a business to be successful in the long term, it must create value not only for its shareholders but also for society and communities at large, from farmers to employees to consumers.” Sales of PPPs in Indonesia represent about one third of Nestlé Indonesia’s total sales. Overall, the Nestlé Group reached sales of USD 33 billion in emerging markets in 2009; PPPs accounted for USD 8 billion overall. The population in emerging markets is expected to grow by 3.3 billion by 2050 and one billion additional consumers will be entering the cash economy within the next ten years.