General presentation of the Nestle Company:
The Nestle group is currently the world leader in the food sector. Its turnover is achieved through the sale of drinks, dairy and ice cream products, prepared meals and seasonings, pharmaceutical products, nutrition and well being products, animal food, chocolates, biscuits and confectionary.
These products are sold worldwide under different brands some of which are household names.
Know the competition to Nestle’s shares:
The Nestle Group is one of the global leaders in the food sector, particularly due to its large and diversified range of brand names. However, other giants in this sector offer similar products that also benefit from major brand names and these represent strong competition to Nestle. It is therefore important to know the major competitors of this company and include them in your fundamental analysis of this stock market asset to be able to implement an effective investment strategy. To assist you here is a list of the major direct competitors to Nestle worldwide:
Strategic alliances implemented by the Nestle Group:
To conclude here are some recent partnerships implemented by the Nestle Group.
- Coca-Cola: In 2001 the Nestle Group allied themselves with the Coca-Cola Group to create a joint enterprise in the tea sector, named Beverage Partners Worldwide, or BPW, which notably led to the creation of the Nestea brand range of tea products. But recently the two companies decided to end this joint enterprise by making Nestea an independent company in the beginning of 2018.
- Alibaba: In 2016, with the aim of developing its market in the Asian sector Nestle became a partner of the Chinese e-commerce giant Alibaba by selling some of its products on their online sales platforms.
- Enterome: Finally and more recently in 2017, the health subsidiary of Nestle, Nestle Health Science, announced the implementation of a joint enterprise with the French company Enterome for the development of chronic liver and intestine inflammatory illness diagnostics.
Introduction and quotation of the Nestle shares:
The Nestle share price is actually quoted on the Pan European market of the NYSE ARCA Europe stock market. It is also integrated in the calculation of the Stoxx Europe 50 stock market index.
The historical stock market charts of the Nestle share price takes into account the highly positive growth of this asset over the last ten years. We notice just one downward correction between 2007 and 2009.
Stock market data
To better understand the position of the Nestle Company on the international stock markets it is of course important to know its financial and stock market history as well as other relevant general information about the company. Here therefore are some important stock market facts and figures you should know that will assist you in implementing strong strategies when speculating on this asset.
- In 2017 the total stock market capital of the Nestle Company stood at 252,240.47 million Swiss Francs.
- The total number of shares issued by Nestle and currently in circulation on the markets is 3,188,400,000.
- The Nestle share price is currently quoted on the Main Standard market of the SIX Swiss Exchange in Switzerland.
- The Nestle Company is also integrated in the composition of the FTSE Eurotop 100 European Stock Market Index and is therefore one of the top 100 European companies relating to capital.
- The shareholding in the Nestle Company is composed of 79% corporate investors and 21% private and independent investors.
To understand how the Nestle share price has evolved over the last few years it is primordial to combine the historical technical analysis of this asset with a fundamental analysis. To do so here are some significant dates you should know that relate to major economical and financial events experienced by this group over recent years.
- In 2002 Nestle founded a research group named Nestle Venture Capital Fund for life science with a capital of 100 million Euros.
- In 2011 Nestle purchased 60% of the shares in Hsu Fu Chi International for the amount of 1.7 billion dollars.
- In 2012 the group purchased the infant nutrition subsidiary of Pfizer for 11.9 billion dollars. In the same year Nestle became the largest company in its sector worldwide.
- In 2013, the group sold its Jenny Craig branch to an investment fund. In the same year it sold its 10% share of Givauden for 1.08 billion Swiss Francs.
- In 2014 Nestle buys the skin care products line from Valeant Pharmaceuticals for the sum of 1.4 billion dollars and sold 8% of their shares in L’Oréal for 6.5 billion Euros.
- In 2015 Nestle wished to sell its subsidiary Davigel to Brakes group for the amount of 200 to 300 million Euros. In the same year the group decided to merge its ice cream activities in Europe and certain emerging countries with R & P Ice Cream.
- In 2016 this agreement was finalised and the joint company Froneri was formed which integrated Nestle’s frozen food activities.
- Also in 2016, Nestle announced the buyout of shares it didn’t yet hold in Osem, 36.3% in fact of the foods sector, for the sum of 840 million dollars. The group then announced the acquisition of a 15% stake in Aimmune Therapeutics, a medical company specialised in food allergies, for the sum of 145 million dollars.
What are the strengths and advantages of the Nestle share as a stock market asset?
First of all, of course, the Group's positioning as one of the leaders in the global food industry. This position is due in particular to the many brands owned by the group and which we have discovered in detail above.
On the other hand, the Nestle Group relies heavily on a strategy of innovation and advanced research. Its R&D investment capabilities enable it to react very quickly to new consumer needs and help it to offer products that meet those needs before the competition does.
Finally, it is of course well known that Nestle enjoys a very comfortable financial position and an assured profitability that gives investors a high degree of reassurance.
For the years to come, various opportunities are available to the Nestle Group and could tip the forecasts in favour of a further rise in its share price on the stock market. In particular, the efforts made by the company in terms of developing its activities and products in the field of nutrition and well-being could rapidly bear fruit in a consumer society that is increasingly attentive to the quality of life.
Nestle also continues to enjoy its leading and pioneering position in the pod coffee market with a marketing strategy that has not yet delivered its full potential and that should continue to appeal to the public in the years to come.
Finally, it is known that the Nestle Group is currently focusing its efforts on emerging markets, particularly China and India, which could bring it many long-term benefits.
Weaknesses and disadvantages of the Nestle share as a stock market asset :
Firstly, the group has recently suffered greatly from the health scandal concerning the presence of horse meat in some of its prepared products. Although the fallout from this episode is fading over time, it has somewhat tarnished Nestle's brand image.
The Group also faces some significant challenges and threats to its continued existence. The greatest threat, of course, comes from competition from the other retail giants, which is becoming increasingly strong, with market shares that are evolving negatively for Nestle to the benefit of its rivals.
Nestle also needs to find ways to reduce or at least maintain its current manufacturing and production costs despite the strict compliance rules that are becoming more and more burdensome, particularly for food products, and in an increasingly competitive market. Finally, production costs are also threatened by global water scarcity, leading to higher transport and treatment costs and reduced competitiveness.
In order to maintain its leadership over the long term and ensure that its share price continues to rise, Nestle must ensure that effective solutions are in place to address these challenges. For your part, and as an investor, you will of course have to keep an eye on the decisions taken by the Group, but also on the various innovations that could generate sufficient income to make up for these equally significant losses.