Nestlé Courts Retailers With Consumer Insights

CAROL ANGRISANI

GLENDALE, Calif. — Brad Alford is the first chief executive officer of Nestlé USA to come from a marketing background, rather than from the sales side of the business. And he's making the most of it.

Alford's leveraged his expertise to instill in his workforce the importance of understanding different demographic groups.

“One of the first things I tried to get across is that we're a consumer-driven business and we need to understand consumers, and have more competency in marketing,” Alford told SN. “My predecessors understood that, but I'm putting more emphasis on it.”

Chairman and CEO of Nestlé USA since 2006, Alford's tenure with Nestlé spans 28 years. He joined the Carnation Co. in 1980 as a sales trainee in St. Louis, and moved on to serve in various other marketing and leadership roles in Australia and the U.S. Prior to becoming chairman and CEO of Nestlé USA, he was president and CEO of Nestlé Brands Co.

Alford spoke to SN about where the company is headed.

SN: How important is it to Nestlé to use the retail store as a marketing medium?

Alford: A lot of manufacturers, including Nestlé, are moving resources into that area. It's important because a lot of decisions are made at store level. At the same time, we're focusing more on how to influence shopping decisions before a person gets into the store.

We built an organization here that's working on the marriage of consumer insights with category management skills. It's a matter of taking consumer learnings and bringing them to our category management people so that they can help retailers figure out how to grow the category for everyone's benefit. We're in the process of putting the tactical plan together on that. We've made a fairly large investment in that area over the last 12 months, and you'll see more of it in 2008.

Take club stores. The reason a shopper goes to a club store is different from the reason a shopper goes to a convenience store. Once you understand what the shopper wants, then you can design your products to fit that. As an example, we just rolled out a new platform called Easy Portions for our Stouffer's business. Easy Portions is all about being able to buy in bulk, but also being able to prepare in portions at the household level.

The first item to launch is Stouffer's Easy Portions Mac & Cheese, which contains free-flowing macaroni precoated with cheese. You can pour out as much as you want and microwave it. The resealable bag can be closed for later use.

[Sold in a 2-pound, 5½-ounce bag, Easy Portions Mac & Cheese was designed especially for club stores, but is available to all retail channels. It is currently being tested at Giant Eagle, Safeway, Meijer and H.E. Butt Grocery Co. stores.]

SN: What's the biggest change you've made to the company since becoming CEO in 2006?

Alford: Along with emphasizing consumer insights, I've focused more on innovation. Over the last 10 years, we've been good at “renovation,” but not as good at innovation. I define renovation as giving the consumers what they know they want, such as foods with less sugar, fat, etc.

Innovation is different: It means giving consumers what they don't know they want, like what the iPod and GPS systems did when they came to market. People who bring consumers things before they know they want them are the ones that are truly successful.

The bulk of where our company makes money and still grows sales are in places where we've innovated. It's our core competitive advantage, and we have to get back to that. We're spending a lot of time trying to figure out ways to be more innovative.

SN: In what ways is Nestlé responding to the health and wellness trend?

Alford: There's a dichotomy in terms of people racing to better-for-you and portion control, but also toward indulgence. As a marketer, you have to respond to both. There's a role for [sweets] in a balanced diet. If my kids want chocolate chip cookies, they can have them, just not eat 20 of them. We are responding to health concerns in many ways, such as by coming out with Nesquik with 25% less sugar. The next step is to go beyond taking out what's “bad” and putting in more of what's good and creating a product that still tastes good. We recognized that it's difficult to get vegetables into the diet and addressed it with Juicy Juice Harvest Surprise [a 100% juice that provides a two-thirds serving of vegetables and 1-1/3 servings of fruit per 8-ounce glass].

SN: Are there any plans to bring the Jenny Craig brand to supermarkets?

Alford: No.

SN: At a Morgan Stanley conference, you mentioned that Nestlé is looking to expand ready-to-drink beverages into new channels. What's new with this effort?

Alford: The consumer is changing, in that beverage consumption is not just for the home anymore. We see RTD as a big opportunity.