Nestle's Brand Management Strategies
| Case Code: MKTG039 Case Length: 10 Pages Period: 1990 - 2002 Pub Date: 2002 Teaching Note: Available |
Price: Rs.500 Organization : Nestle SA (Nestle) Industry :Chocolates and Confectionery Countries : Switzerland Themes: Brand Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In mid-1988, Nestle SA (Nestle), the world's largest consumer packaged foods company based in Switzerland, acquired Rowntree Mackintosh PLC (Rowntree), in the largest ever acquisition deal of a British company during that time.
Rowntree was the world's fourth largest manufacturer of chocolates and confectionery products, with well-known brands like Kit Kat, After Eight, Smarties and Rolo.
The deal attracted considerable attention all over the world since several bids to acquire Rowntree were rejected. Rowntree claimed that the bids were too low for its valuable, well-recognized brands.
In the end, Rowntree was acquired by Nestle for £2.5 billion, two and a half times the pre-bid price and eight times the net asset value of the company. This acquisition made Nestle the largest chocolate manufacturer in the world.
Analysts felt that Nestle had paid £2.5 billion because of Rowntree's brands, not its past financial performance. Industry observers wondered how Nestle would manage Rowntree's brands.
Rowntree followed a "one product, one brand" policy. The brands were simply Kit Kat, After Eight, Smarties and Rolo, Rowntree was never mentioned.
Moreover, Rowntree's brands were not strongly managed European brands. In fact, according to an analyst3, Kit Kat was one of the worst cases of an over-localized brand of a company across Europe.
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