Project Report

On

NESTLE MILKPAK

Submitted To:
Mr. 1awad Saleem
Submitted By:
Naveed Ahmed 071191
Rehman Baig 071172 Tariq Waseem 071194 Mazhar Cheema
063171 Hamza Ahmed 083606
Table of Contents
Executive Summary 4
NESTLE 5
HISTORY OF NESTLE 5
COMPANY VISION 5
COMPANY MISSION 5
PRODUCTS 6
NESTLE IN PAKISTAN 6
NESTLE MILKPAK 6
COMPETITORS 7
Competitive Advantage 7
Demographics oI Pakistan 8
Pakistan Milk Market/Industrial Analysis 9
MILK Flow Channels in Pakistan 12
Industry SWOT Analysis 13
Strenghts 13
Weaknesses 13
Opportunities...........................13
Threats..............................13
Milk Supply Chain in Pakistan 14
Milk Industry oI India (SWOT).........................15
Market Segmentaion oI Nestle Milkpak 18
Geographic Segmentation 18
Demographic Segmentation 18
Targeting 18
Situation Analysis 18
Awareness: 18
Top oI the mind recall 18
Market Share () 19
Market Trends 20
Market Potential 20
SWOT Analysis (Nestle Milkpak) 20
Strengths 20
WEAKNESSES 21
OPPORTUNITIES 21
THREATS 21
Positioning Strategy 22
DiIIerentiation 22
Marketing Mix 22
PRODUCT 22
PRICE 22
PLACEMENT 23
Distribution Channels 23
PROMOTION 23
Marketing Strategy 23
Recommendations 23
BIBLIOGRAPHY 24




Executive Summary
Pakistan is an agricultural country. According to Ministry oI Food, Agriculture and livestock,
agriculture accounts Ior 20.9 percent oI the GDP. Dairy industry contributes 49 to the
agriculture value and 11 to the GDP. Annual production oI milk is 35.25 Billion liters in the
country; But the Processed milk is only 4 oI the total production.
Like other countries Dairy is not a dedicated proIession oI the people, Iarmers is associated with
dairy and agriculture at the same time, ProIitability Ior the Iarmers is very less. InIrastructure is
not developed, cooling tanks and other Iacilities are not available, and the large part oI milk
production is wasted. There is a multi-hierarchal distribution system oI the milk; the Iarmers are
not getting reward oI their work. All these Iactors are making this industry unattractive Ior the
Iarmers and the industry is no developing up to the mark.
Only 4 oI the total milk production is processed and used in urban areas oI the country.
According to Pakistan Dairy Development Authority
Only 0.52 Billion liters UHT and 0.5 Billion liters pasteurized milk is
available in the country.
In urban areas 4.7 Billion liters milk is provide by Gawalas.
1.27 Billion liters processed milk is sold by the milk shops.
There is a potential oI about 5 billion liters oI milk sold in the urban
areas.
In urban areas people are more health and quality conscious, the income
level oI urban population is also good so this segment has potential Ior
UHT and Pasteurized milk.
Nestle is the world largest Iood company and nestle MilkPak is Nestle`s Iamous UHT milk
brand. Nestle Milkpak has south Asia`s biggest Plant at Kabirwala. It is targeting upper and
middle class. It is diIIerentiating its brand by adding Iron and Vitamin 'C.
The Nestle MilkPak is Iollowing growth strategy. The immense competition is going in the
market; it is recommended that Nestle Milkpak should invest more in milk business and other
value added milk products. In this way Nestle Milkpak can IulIill the local demand by locally
processed milk and milk products instead oI the imported milk products. Nestle has brand
recognition throughout the world and they can export milk powder and other value added
products in Iuture.


Nestle
[ Nestle is the largest Iood company in the world.
[ It is present in all Iive continents, has an annual turnover oI 74.7 billion Swiss
Frances.
[ There are 509 Iactories are running in 83 countries, having 231,000 employs.
History Of Nestle
[ Our story begins in 1867, when Henry Nestle developed a baby Iormula that
saved child`s liIe and marked the beginning oI Nestle.
[ It is originally consisted oI two companies and two products, Henry Nestle and
His baby Iood in Vevey, and the Anglo Swiss Condensed Milk company and its
condensed Milk in Cham, both in Switzerland.
[ His Iirst Iactory was located in Vevey.
[ In 1875, He sold His Company and retired.
[ In 1880, second Iactory was built in bercher
[ In 1883, Iirst time Nestle built a Iactory abroad, in Edlitz Grimmenstein
[ In 1890, Vevey Iactory produced 28 billion cans oI Milk Iood and 2.2 million
cans oI condensed Milk.
[ In 1912, Nestle begins it long relationship with South Asia when Nestle
condensed Milk company start.
[ In 1979, Milkpak Ltd. Is Iounded by Syed Baber Ali. It manuIactures UHT
Milk, Cream and Butter as well as Iruit Juices.
Company Vision
[ Vision oI Nestle Milkpak is to expand business according to the increasing
demand oI market.
[ As per our company vision in 2020 production capacity oI all plants working in
Pakistan is being increased.
[ So extension oI Kabirwala Plant is the example oI our company vision.
Company Mission
[ At Nestle, we believe that research can help us to make better Iood, so that
people live a better liIe.
[ Good Iood is the primary source oI good health, so we are trying to make good
Iood.
[
To provide Iresh and pure products to the customers, we introduced (SHE) SaIety,
Health and environment policy to protect health oI our employs and keep clean
our surrounding environment.
Products
Bottled water
Baby Iood
Dairy products
BreakIast cereals
Nutrition
Prepared Iood


Nestle In Pakistan
[ Nestle have been serving Pakistani consumers since 1988 when the parent
company` Switzerland based` on Nestle Iirst acquired share in Milkpak.
[ Nestle acquires 40 share in Milkpak.
[ In 1990, Sheikhupura Iactory started the production oI Nido Milk Powder
cereals;
[ 1n 1992, Nestle took over the running oI company (Kabirwala plant) and began
to develop its Milk collection network.
[ In 1996 Milkpak was renamed to Nestle Milkpak Ltd.
[ In 1997, It becomes a Iully owned unit oI Nestle Pakistan.
[ 1n 1998, Nestle Milk collection system in Punjab matures and company is able
to buy all its Milk Irom Farmers instead oI relying on contractors.
[ In 2005, Nestle Milkpak Ltd. Is renamed again Nestle Pakistan.
Nestle Milkpak
[ ' Dhood ki Qudrati Ghizayat Pure, nutritious goodness oI Milk
[ Pure, rich and delicious Nestle Milkpak standardized (UHT) beneIits Irom
Nestle`s expertise in bringing you the best liIe has to oIIer and beneIits Irom 140
years oI consumers trust.
[ Encourage your Iamily to exercise regularly, eat a healthy, well balanced diet
and drink pure, nutritious Milk Ior good health.
[ Milk is a must drink Ior your children as it is a rich source oI calcium that helps
in the growth and development oI strong bones and teeth.
A 250ml Nestle Milkpak Glass consist of followings:
[ 27-30 oI calcium, 15-18 oI protein, 31-34 oI phosphorous,6-9 oI
Vitamin A and 160-169 k Cal oI energy, as recommended dietary allowance by
national Academy oI Science (USA).
The contents of the above said products have the following fruitful benefits for health
improvement of Human body.
[ Calcium
It is important Ior the growth oI strong bones and teeth.
[ Protein
It is necessary Ior cell and tissue growth.
[ Phosphorous
It is important Ior healthy bones and teeth.
[ Vitamin A
It improves vision and keeps skin and hair healthy
Competitors
The main competitors oI Nestle Milkpak are:
[ Haleeb Milk
[ Olpers milk
[ Good Milk
[ Dairy Queen Milk
Competitive Advantage
[ Nestle Milkpak never compromises on quality.
[ Nestle Milkpak`s extensive milk collection system ensures that the milk you get
is oI the Iinest quality.
[ Nestle`s products are available in every city and town
[ Nestle is using the latest technology in its production units.
[ Nestle makes milk powder oI the surplus milk in winter and converts this milk
powder into UHT milk in summer.


Demographics of Pakistan
Pakistan is a small country with limited resources. But the population oI Pakistan
is 180,000,000. Pakistan has 6
th number in population in the world.

Population and Growth
Population: 180,000,000 (2008 EST.)
Growth rate: 1.828 (2007 EST.)
Birth rate: 27.74 births/1,000 population (2007 EST.)
Death rate: 8 deaths/1,000 population (2007 EST.)
Net migration rate: -1.24 migrant(s)/1,000 populations (2007 est.)
Age Structure
0-14 years: 40 (male 33,293,428; Iemale 31,434,314)
15-64 years: 56.9 (male 48,214,298; Iemale 46,062,933)
65 years and over: 4.1 (male 3,256,065; Iemale 3,542,522) (2007est.)
Sex ratio at birth: 1.05 male(s)/Iemale
under 15 years: 1.06 male(s)/Iemale
15-64 years: 1.05 male(s)/Iemale
65 years and over: 0.92 male(s)/Iemale
Total population: 1.05 male(s)/Iemale (2007 EST.)
Literacy:
Definition: Over the age oI 15 and can read and write.
Total population: 54 (2004 EST.)
Male: 60
Female: 40








Population of Major Cities of Pakistan
Cities Population
Karachi 15 Million
Lahore 9 Million
Rawalpindi 3 Million
Faisalabad 2.6 Million
Multan 1.6 Million
Gujranwala 1.3 Million
Hyderabad 1.3 Million
Islamabad 1.3 Million
Peshawar 1.0 Million
Pakistan Milk Market/Industrial Analysis
[ Pakistan`s economy is predominantly agrarian in nature.
[ Agriculture accounts Ior 20.9 percent oI the GDP.
[ 43.4 percent oI the total work Iorce is Irom agriculture sector and it is the main source oI livelihood Ior 66 percent oI the
country`s population living in rural areas.
[ Growth in the agriculture sector registered a sharp recovery in 2006-07 and grew by 5.
[ Pakistan is the 5th largest milk producing country in the world.
[ An estimated 33.25 billion liters oI annual milk is produced.
[ Approximately 50 million animals managed by 8 million Iarming households.
[ Contribution oI the livestock sector to Pakistan`s GDP is at 11 while the processed milk sector contributes about 0.43
per cent.
[ The milk economy represents 27.72 oI the total value oI the
Agriculture sector.
Total Target Market Of Milk
180000000
Annual Production OI Milk
(Billion Liters) 33.25
Total market oI Gawala (96) Billion liters 31.92
Total EXISTING market of processed
milk (4) Billion Liters
1.33
Need Analysis (UHT and Loose Milk)
Predicted Supply of Fresh and UHT Milk
Year
Supply of fresh milk
(Million liters)
Supply of UHT milk
(Million liters)
2007-08 33805.10 557.72
2008-09 35495.25 648.43
Projections of Fresh Milk Production and Consumption Up to 2008 - 09
Years
Annual Production
(million liters)
Annual Consumption
(million liters)
2008-09 35495.25 36361.25
2009-10 37669.75 38188.92

About 1.02 billion liters milk is imported.
Projections of UHT Milk Production and Consumption up to 2008- 09
Year
Annual Production
(million liters)
Annual Consumption
(million liters)
2008-09 648.43 353.71
2009-10 753.89 372.05
Our projections show increasing deIicits in Iresh milk production and increasing surpluses in UHT milk market in the run up to 2009-10, which
suggests that the industry should get ready to Iace challenges.
The analysis shows that Pakistan`s milk yields are very low, and even simple management oI Ieed (proper timing, proper mix and so on) can
increase yield substantially. This requires intervention at two levels:
a) The Iarmers need to have better knowledge oI Ieed management. This can be done by involving milk plants and provincial livestock
departments who can provide training and extension services to dairy Iarmers.
b) The Ieed industry needs to be developed substantially to provide better quality animal Ieed at aIIordable prices. Currently we do not
have suIIicient supply oI high quality nutrients and additives, especially in rural areas. A speciIic package needs to be developed with
the help oI the government and in partnership with the private sector that would Iacilitate and encourage the development oI a modern
Ieed industry. Further, the vast potential oI using molasses as concentrate in animal Ieed also need to be taped.






Milk Flow Channels in Pakistan



Dairy Farmer



Formal sector 4 Share
Informal Sector 9 " Share
Cawala (Milkman)

#etailer
Milk Collector
Distributor/Retailer
Milk Processing Plant
Milk Collection Agency
Customer

Industry SWOT Analysis
Strenghts:
Pakistan dairy industry is the World`s IiIth largest industry
Pakistan Dairy Industry is Cheaper than Austrai, America and other deveolped countries.
Farmers are engaged in agriculture and dairy at the same time.
By-product oI Agriculture is used in Dairy
By-product oI dairy is used in agriculture.
eaknesses:
Poor proIitability Ior Iarmers.
Lack oI contact Ior Iarmers to the market mechanism.
Poor dairy inIrastructure in rural areas.
Lack oI education among the Iarmers is making it diIIicult to change Iarm and dairy management systems.
Lack oI knowledge about optimal Ieed.
Lack oI a cold chain to protect milk quality.
Lack oI access to well trained support service staII such as
Veterinarians.
Despite the huge volume oI milk produced in Pakistan, processors Iind it hard to procure suIIicient milk to meet Iuture
consumer demand.
Increasing demand Ior imported products.
The product range oIIered to consumers is not well developed.
Production oI milk Ialls to 55 oI peak production at its lowest point in mid-June.
The demand increases 60 during June compared to December when the milk supply is ample.
Opportunities:
There is an opportunity Ior companies to introduce value-added products like shrikhand, ice creams,paneer, khoya,
Ilavored milk, dairy sweets, etc.
There is a phenomenal scope Ior innovations in product development, packaging and presentation.
%hreats:
Very low quality milk is provided by the milkmen to dairy Iarms which is a very big threat Ior the entire market.
The shortage oI milk providing animals is also a threat Ior entire milk industry.
Milk Supply Chain in Pakistan




Consumer
Gawala (Milkman)
alwai (sweet shop)
De-creamer
Milk Collector
Dairy Farmer














Retailer










Milk Industry of Neighbour Country (India ):
Strenghths:
Demand profile:
Absolutely optimistic
Margins:
Quite reasonable, even on packed liquid milk.
Flexibility of product mix:
Tremendous with balancing equipment, you can keep on adding to your product line.
Availability of raw material:
Presently, more than 80 per cent oI milk produced is Ilowing into the unorganized sector, which requires proper
channelization.
Technical manpower:
ProIessionally-trained, technical human resource pool, built over last 30 years.
eaknesses:
Perishability:
Pasteurization has overcome this weakness partially. UHT gives milk long liIe. Surely, many new processes will Iollow to
improve milk quality and extend its shelI liIe.
Lack of control over yield:
Theoretically, there is little control over milk yield. However, increased awareness oI developments like embryo
transplant, artiIicial insemination and properly managed animal husbandry practices, coupled with higher income to rural
milk producers should automatically lead to improvement in milk yields.

Logistics of procurement:
Woes oI bad roads and inadequate transportation Iacility make milk procurement problematic. But with the overall
economic improvement in India, these problems would also get solved.
Problematic distribution:
Yes, all is not well with distribution. But then iI ice creams can be sold virtually at every nook and corner, why can`t we
sell other dairy products too? Moreover, it is only a matter oI time beIore we see the emergence oI a cold chain linking the
producer to the reIrigerator at the consumer`s home!
Competition:
With so many newcomers entering this industry, competition is becoming tougher day by day. But then competition has to
be Iaced as a ground reality. The market is large enough Ior many to carve out their niche.
Opportunities:
Failure is never Iinal, and success never ending. Dr Kurien bears out this statement perIectly. He entered the industry
when there were only threats. He met Iailure head-on, and now he clearly is an example oI never ending successes! II
dairy entrepreneurs are looking Ior opportunities in India, the Iollowing areas must be tapped:
Value addition:
There is a phenomenal scope Ior innovations in product development, packaging and presentation.
Given below are potential areas of value addition:
o Steps should be taken to introduce value-added products like shrikhand, ice creams,paneer, khoa,
Ilavored milk, dairy sweets, etc. This will lead to a greater presence and Ilexibility in the market
place along with opportunities in the Iield oI brand building.
o Addition oI cultured products like yoghurt and cheese lend Iurther strength - both in terms oI
utilization oI resources and presence in the market place.
o A lateral view opens up opportunities in milk proteins through casein, and other dietary proteins,
Iurther opening up export opportunities.
o Yet another aspect can be the addition oI inIant Ioods, geriatric Ioods and nutritional.
Export potential:
EIIorts to exploit export potential are already on. Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle
East. Following the new GATT treaty, opportunities will increase tremendously Ior the export oI agri-products in general
and dairy products in particular.
%hreats:
Milk vendors, the un-organized sector:
Today milk vendors are occupying the pride oI place in the industry. Organized dissemination oI inIormation about the
harm that they are doing to producers and consumers should see a steady decline in their importance.
The study oI this SWOT analysis shows that the strengths` and opportunities` Iar outweigh weaknesses` and threats`.
Strengths and opportunities are Iundamental and weaknesses and threats are transitory. Any investment idea can do well
only when you have three essential ingredients: entrepreneurship (the ability to take risks), innovative approach (in product
lines and marketing) and values (oI quality/ethics).
The Indian dairy industry, Iollowing its deli censing, has been attracting a large number oI entrepreneurs. Their success in
dairying depends on Iactors such as an eIIicient yet economical procurement network, hygienic and cost-eIIective
processing Iacilities and innovativeness in the market place.
All that needs to be done is: to innovate, convert products into commercially exploitable ideas. All the time keep reminding
yourselI: Benjamin Franklin discovered electricity, but it was the man who invented the meter that really made the money.

Market Segmentaion of Nestle Milkpak
Ceographic Segmentation:
Milkpak has segmented the market on the basis oI Geographic segmentation and its target market is major populated cities
oI pakistan
Demographic Segmentation:
Nestle Milkpak is also segementing the market on the basis oI Income level oI the people. Three Income level has been
deIined; Higher, middle and lower income classes.
Targeting
[ Urabn areas oI the country
[ Upper and Middle income class
Situation Analysis
Awareness:
%op of the mind recall
Due to strong brand positioning and eIIective advertising, Milkpak has highest awareness level.
Brand Awareness ()
Milkpak 43
Haleeb 38
Olpers 9
Dairy Queen 7
Good Milk 2
Nurpur 1

Market Share ()
Good Milk 1
Milk Pak 45
Dairy Queen 9
Haleeb 22
Olpers 17
Nur Pur 4
Others 2

The table shows that Milkpak has the highest market share due to its consistent quality.



Market Trends
The growth oI processed milk is increasing by 20 annually
People are getting more quality and health conscious with the passage oI time
Due to impurities oI Gawala milk, people are attracting towards processed milk
Key factors are:
Changing liIestyle
InIluence oI Ioreign media
Market Potential
At an average, a Pakistani consumer spends 42 oI income on Iood
Consumer oIten preIer branded Iood items Ior both quality and status reasons
Per capita real GDP has increased at an average oI 5.6 per annum during the last three years
This increase has led to a rise in average income oI people and an increase in consumer spending.
SWOT Analysis (Nestle Milkpak)
Strengths:
Strong Brand image:
Nestle has been serving the Pakistani consumers since 1988, and it has built a strong brand image due to its quality
products.
Quality product:
Nestle Milkpak is known as the best UHT milk in Pakistan due to consistency in quality.
Solid Financial position:
Nestle Milkpak`s annual turnover is Rs.30 Billion which provides it a Iinancial edge over its competitors.



Strong supply chain network:
Nestle collects Milk directly Iorm the Iarmers instead oI relying on the contractors. And it distribution is also very strong.
In this way it has a complete control over its supply chain.
QualiIied work Iorce
Commitment to High Quality Products
Focus on research and development
eaknesses:
The target market oI Nestle Milkpak is upper middle and high class because lower middle and poor class cannot aIIord to
buy UHT milk due to its premium price. This is the only weakness oI Milkpak.
Opportunities:
Estimations of UHT Milk Production and Consumption up to 2008- 09
Year
Annual Production
(million liters)
Annual Consumption
(million liters)
2008-09 648.43 353.71
2009-10 753.89 372.05
The projected values of UHT Milk consumption and production are obtained from the ARIMA model.
More people are coming towards processed milk because loose milk is dangerous Ior health due to a lot oI contamination.
Growth oI processed milk is increasing with 20 annually so Nestle Milkpak has the opportunity to capture a large share
oI market.
%hreats:
Two main competitors Haleeb and Olpers are main threat Ior Milkpak especially the Olpers is growing very Iast.
InIlation is getting higher and higher so the purchasing power oI the people is decreasing day by day.
There is no entry barrier Ior new entrants as the Olpers has come in the market.
Positioning Strategy
Functional Positioning
Nestle Milkpak has adopted the Iunctional positioning strategy like:
'Khaalis He Sab Kuch Hai
'Wohi Qudarti Maza
'Jaan Banaoo
Differentiation
Addition oI IRON and Vitamin 'A & C
Marketing Mix
!roduct:
Quality Product
Nestle Milkpak has the largest market share due to its consistent quality.


Product Style and logo
Nestle Milkpak is available in diIIerent product range and stylish packaging.
Product Lifecycle
Nestle Milkpak has been in the market Ior a very ling time and it is at maturity stage.
!rice:
Competition Based Pricing
Milkpak is holding a large share in the market due to its quality at same price as compared to competitors.

!lacement:
Distribution Channels:
Milkpak is not sold directly to consumers and the complete distribution process is Iollowed. It uses indirect channels Ior distribution
like:
ManuIactureraDistributoraWholesaleraRetaileraConsumer
!romotion:
Focusing on health conscious people in their advertisement.
Promotion Mix
Advertisement
Public relations
Marketing Strategy
Nestle is pursing growth strategy. They have invested $ 70 billion at Kabirwala Plant and they are planning to invest $ 381 billion in the milk
business.
Recommendations
The immense competition is going in the market so Nestle Milkpak should penetrate more and
more in the market.
Only 4 milk is being processed and 96 people are using loose milk so Nestle Milkpak has the
opportunity to capture a large share oI the market through more creative advertising and other
promotional activities.
Nestle Milkpak should invest more on research and development because customers using loose
milk are getting a lot oI contaminations especially in urban areas so Nestle Milkpak can provide
awareness to people in this aspect.



Bibliography
Mr. Imran Rasool: Executive Marketing, Nestle MilkPak.
Mr. Shehzad Anwar: Assistant Area Sales Executive Nestle Milkpak.
Mr. Mustafa Zaidi: Joint Director Research and Development, Lahore Chamber oI Commerce.
Dairy reports:
White Revolution by Pakistan Dairy Development Company
Year book 2006-07, By Ministry oI Food, Agriculture and Livestock.
Websites:
http://www.google.com
http://www.wikipedia.com