For many, making sense of a crazy world is a matter of getting through the day. For Nestlé's Paul Bulcke, it's also a corporate strategy.
In a presentation to investors last month, the Belgium-born Bulcke, chief executive officer of the Switzerland-based food giant, described the challenges and opportunities of competing in what he called a “VUCA world” — volatile, uncertain, complex and ambiguous. Yet Bulcke maintained those varying conditions provide a framework for a successful 21st century food company.
“If you see what's happening in the world, it's fascinating,” he contended. “How the developing world is starting to develop is an underlying trend. Yet at the same time the developed world is giving us new opportunities for our industry. And that is linked with nutrition, food is linked with nutrition, nutrition with health, health with society, and that is then linked with health care costs. There are fascinating opportunities opening up everywhere.”
For Bulcke, this means directing Nestlé to invest in developing countries to realize future growth potential, to value research and development to find new products, and to provide foods that communicate a message of health and wellness that responds to supermarket shoppers worldwide. It also means searching for cost solutions to offset volatility in raw material costs.
Bulcke sees a trend toward health and wellness closely related to the economy, saying Nestlé is “doing its job” when it can provide healthy food affordably.
“I believe we should go [after] this increasing opportunity to bring back food and beverages as an important part of what people can do in their lives with part of that budget in their happiness. Families sitting around the table again [as] health care cost is going through the roof. We know that there are positive relationships there.”
Burt P. Flickinger III, managing director of Strategic Resource Group, New York, said Nestlé was “arguably the strongest CPG company during the recession,” when shoppers tempted by cheaper store labels could still find value in Nestlé brands such as Purina, Hot Pockets, Carnation, Gerber, Stouffers and Nestea. The company is also particularly strong among the fast-growing Latino shopper base, he added.
“The shift to private label has been a challenge,” Flickinger said. “With spending down in dollars and shoppers switching to private brands, one of the challenges for Paul is how Nestlé can work with retailers, wholesalers and co-ops to co-pack more private-brand goods to get more manufacturing line efficiency.”
At the same time, Nestlé has continued to invest in its brands, helping products like frozen pizzas and candy/confectionary to show signs of a rebound, Flickinger added.