“Good Food, Good Life” - Nestlé
I’m delighted to write the first article of my guidebook. Nestlé is quite special for me, since I’ve analyzed this company in my major course when attending the University.
Today, we’re going to get to know about the Nestlé Korea’s business and their performance. Please enjoy our journey.
1. Corporate Overview
Nestlé Korea was established in 1987. However, it is currently operated as division of two companies according to the business units.
In June 2014, Nestlé Korea and Lotte Group invested 50% of each to establish a joint venture and officially launched Lotte-Nestlé Korea Co., Ltd. Lotte-Nestlé Korea own the instant coffee and powdered beverages business, F&B business called Nestlé Professional, and the Pet care business. And the rest of business units, such as capsule coffee business, confectionery and nutrition, are operated by Nestlé Korea Ltd. which was owned by Nestlé S.A. 100%.
For convenience, I will refer to Nestlé Korea Ltd. as Nespresso Korea Ltd. to easily distinguish them.
Company Name | Nespresso Korea Ltd.
Homepage | https://www.nestle.co.kr/
Business | Wholesale and Trading business for Capsule coffee, Non-alcohol beverages, etc.
Selling Items | Capsule coffee, Confectionery, Nutrition
Sales(Y2017) | 191.3 billion won
Number of employees(Y2016) | 251
Company Name | Lotte-Nestlé Korea Co., Ltd.
Homepage | https://www.nescafe.com/kr/
Business | Processing, Manufacturing, and Wholesale and Retail business for Coffee, Petcare(Petfood), Tea
Selling Items | Instant coffee, Coffee mix, Nestea, Petfood
Sales(Y2019) | 249.9 billion won
Number of employees(Y2019) | 477
Brand Portfolio
(1) Nespresso Korea Ltd.
- Beverages: Nespresso, Dolce Gusto
- Confectionery: Kitkat, Polo, Frutips
- Nutrition: Gerber, Boost, Beba
(2) Lotte-Nestlé Korea Co., Ltd.
- Beverages: Nescafé, Nesquik, Nestea, Nescafé Barista
- Nestlé Professional: Maggi, Buitoni, Sjora
- Pet care: Purina ONE, Friskies, Pro Plan, Beyond, Alpo
2. Business Results
I’ll mainly introduce coffee products which are representative for each companies.
Market Share
(1) Nespresso Korea Ltd.
Nespresso’s domestic capsule coffee market share reached about 82%.(As of 2019) And Illy, Lavazza, Capitally(Coffee bean & Tea leaf), and Tasimo(Dongsuh) are struggling for the remaining 18%.
(2) Lotte-Nestlé Korea Co., Ltd.
Since launching “Taster’s Choice” (now Nescafe) in 1989, Lotte-Nestlé Korea had maintained above 10% of market share for over 20 years, as the undisputed second place in the industry.
But, after Namyang entered this coffee mix market as “French Cafe” in 2012, Nestlé’s market share has declined to a single digit. Namyang ranked second with the 12.5% of market share, with a clever promotional phrase “put fat-free milk, not sodium caseinate in the coffee prim”, while Nestlé’s market share fell to third place with only 5.1% of market share.
Source: AC Nielsen Korea
Financial Information
(1) Nespresso Korea Ltd.
Nespresso Korea recorded about 191.3 billion won of sales and about -16.3 billion won of operation profit in 2017.
(I couldn’t found the recent performance of Nespresso Korea, even looked through Nestlé global annual review, because South Korea didn’t count as the principal market.)
(2) Lotte-Nestlé Korea Co., Ltd.
Lotte-Nestlé Korea recorded about 249.9 billion won of sales and about 3.5 billion won of operation profit in 2019.
source: NICE evaluation, graphic by Saramin(Korean job portal website)
The next article will cover the industry trends and the marketing strategies and activities.
Please stay tuned!