Nestlé's Microdistribution Efforts to Serve the Low Income Consumers in Brazil

Abstract:

The case discusses the micro-distribution practices of the world's largest nutrition and wellbeing company Nestlé in Brazil. Brazil was the first market where Nestlé started a regionalization unit to develop products considering the needs of each region in the emerging markets in which the company operated. The products developed in these units were known as popularly positioned products (PPPs). They were tasty, nutritious, affordable products, sold in small quantities. These products were enriched with micronutrients to help address the nutritional deficiencies that existed among low income consumers. Though Nestlé developed the required products, it faced a major challenge in distributing them to the targeted consumers.

Its existing distribution systems were not designed to distribute the products in the quantity demanded by the target consumers in the urban slums called favelas. In order to address this issue, Nestlé came up with a distribution system called Nestlé até Você, which was a door-to-door micro-distribution system, involving people from the local community. The micro distributors recruited resellers who were women from the favelas, who peddled Nestlé's products in their neighbourhood. The system benefited all the parties involved - the micro-distributors and resellers benefited through the extra income that they earned and the customers benefited as they got access to products which had not been available to them previously. Furthering its micro-distribution in the country, Nestlé launched the floating supermarket that targeted inaccessible villages in the Amazon, to supply products to consumers as well as to micro-distributors in those areas.

Issues:

The case will help the students:
» Understand the low income segment, particularly the BOP segment, and understand how products can be developed and marketed to this segment.
» Examine the distribution challenges in the BoP market and evaluate alternate distribution models for the segment.
» Study the micro-distribution model adopted by Nestlé.
» Discuss and debate whether the model is sustainable.
» Discuss ways in which Nestlé could improve its micro-distribution model and achieve better penetration in Brazil.

Contents:

Keywords:

Bottom of the pyramid strategy; Distribution; Logistics; Microdistribution; Popularly Positioned Products; Low Income Consumers; Favelas; Nestlé até Você; Nestlé Até Você a Bordo; Floating Supermarket; Emerging markets strategy; Nestlé; Nestlé Brasil

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