UNIVERSIDAD DE ESPECIALIDADES ESPIRITU SANTO

DISTRIBUTION CHANEL’S PAPER

TOPIC:

HOW NESCAFE CREATE VALUE IN ITS SUPPLY CHAIN

NAME:

MILDRED NAVIA

SAMBORONDON,2019
INTRODUCTION

Since its creation, nestle has considered the different problems that exists at that time in

society and has treated it through its product consumption. Henri Nestlé, a man that considered the

abolition of hunger at that time, especially in kids, created a product (that is known nowadays as

“cerelac”) that was a mixture of milk powder and wheat, in order to fight against the hunger that

was passing Europe at that time.

“Nestlé’s founder, German-born pharmacist Henri Nestlé, launches his ‘farine lactée’

(‘flour with milk’) in Vevey, Switzerland. It combines cow’s milk, wheat flour and sugar, and

Nestlé develops it for consumption by infants who cannot be breastfed, to tackle high mortality

rates. Around this time he starts using the now iconic ‘Nest’ logo.” (Nestle, 2019)

Nestle has contributed to the development of raw material in Ecuador to final product,

adding a value strategy which is called “construction of shared value”. Since the first step of the

supply chain of different products, nestle has added the social responsibility approach in order to

apply the shared value, so society and the company will get the different advantages that be spread.

This is how Nestlé, through the creation of shared value, has contributed to the value on

the raw material of its specific products. Products such as cocoa and coffee, are part of a long

journey which has been the protagonist and within one of the first positions of products exported

outside the country and consumed within it.

“Climate change, crop diseases, water scarcity and the fact that people leave farms to move

to cities threaten the future of coffee. It is for this reason that we invest more in the production of

sustainable coffee than any other brand of coffee.” (NESTLE.ES, 2019)

consumption with respect to many Ecuadorian households. The social responsibility that nestle

maintains as a global commitment falls within the Nescafé category.

BODY

During the first step of the Nescafe supply chain, the raw material for making coffee is

received. Nestle, through the aforementioned commitment, works in the reception of raw materials

together with small and medium-sized farmers, in order to improve their quality of life and improve

the productivity of the grain for a better coffee aimed at the consumer.

“NESCAFÉ helps farmers, communities and the planet to ensure that our coffee is grown

responsibly. We respect farmers by helping them grow a healthier, disease-resistant and better-

quality coffee by increasing their income. We respect communities by creating opportunities for

younger generations to preserve the heritage of agriculture and not leave farms around the cities.

In addition, we respect our planet, so we create new agricultural techniques that protect and

preserve natural resources.” (NESTLE.ES, 2019)

The farmer, the opportunities achieved and the planet are the main approaches that nestle

along with Nescafé intends to achieve for better sustainability. As the company mentions through

the previous appointment, the 3 approaches generate value creation through respect for the farmer,

creating opportunities within the field and productivity without altering and respecting the

environment.

“We are committed to investing 350 million Swiss francs between 2010 and 2020 as part

of our plan to help farmers, communities and the planet. In 2017 we received almost 460,000 tons
of coffee obtained responsibly, 54% of our total volume; which makes us the largest user of green

coffee obtained in a responsible way. These are some of the objectives we intend to achieve by

2020.” (NESTLE.ES, 2019)

On a global level, nestle has a great impact on social commitment. The constant objective

of this company is to set short, medium- and long-term goals regarding the scope that the

commitment can generate, in this case with the farmer. Millions of families in the country have

benefited through Nestle's social responsibility program in collaboration with nestle, which has

caused the farmer to generate more effort and receive greater reward by better treating the cocoa

bean process. As can be seen in the previous appointment, globally. Nestle has achieved medium

and long-term objectives for the year 2020, where it establishes the increase in the number of

farmers destined to coffee treatment and its expansion with respect to the volume of cocoa obtained

without leaving aside the responsibility and commitment to society and the planet.

Like the cocoa plan program, nestle establishes cocoa process centers globally, where you

can see the largest venues such as China, Ivory Coast and Ecuador, the latter being characterized

by the strategy of a healthier and more resistant grain.

“José, Fernando and Andrea, from our NESCAFÉ research and development center in

Ecuador, have spent several decades cultivating our supercafetos. They resist disease naturally,

require less water and produce delicious coffee beans. Good job, friends! ” (NESTLE.ES, 2019)

Through its different programs and its strategy for the consumer, Nestle provides a series

of strategic advertising media so that each household, in this case within Ecuador, contributes to

the idea of giving more value to the consumption of the product as well as The farmer provides

more quality in the process of raw material and finally how the company has managed to preserve
for a long time the strategy of valuing the protagonist of the most essential that is the raw material

for the product.

“A Nestlé brand that started as an idea to solve the problem of what to do with

unsold coffee has been positioned as one of the world’s favorite drinks. The increasing

demand for product choice, value and quality has led to an increase in the coffee being

available to consumers.” (Nunez, 2016)

One of Nestlé's challenges in the market is the variety of consumers that have increased

over time with respect to its variety of products. That is why throughout the years and together

with the shared value strategy, and globalization regarding coffee drink considered as a favorite

within a target between teenagers and teenagers-adults; The focus of this company is to provide

the consumer with the experience of coffee at home, so that each cup of Nescafé consumed is

synonymous with memories of the family and household that consumes said coffee.

Within the shared value strategy with respect to the commitment to the environment, Nestlé

seeks to improve and progress its contribution to the planet, growing seedlings, and promoting the

training of its cocoa farmers to handle this form of cultivation.

“Seeds require the proper amount of light, temperature, oxygen, and water to germinate

and form seedlings. After shooting, the seedling grows gradually while its food storage tissue

shrinks. The seedling develops a root system and leaves to begin photosynthesis.” (MaximumYield

Inc., 2019)
 According to the author's previous quote, so that a seed can germinate correctly, it needs

specific factors such as water, light and an adequate temperature. Modified plants are seeds shot

at strategic locations, so that they grow gradually to the sea distributed strategically.

CONCLUSION

The relationship that a company has with its suppliers and consumers are a vital part of

their successful development. Despite the fact that the average retail base demands the product

with the lowest price, consumers also recognize the quality that it must be required. This is how

Nestlé among those and more strategies through its shared value is the best quality of its products.

Nescafé, for its part, encourages farmers through training and incentive in many ways, it values

the farmer and increases his quality of life, the value to it and thus contributes to society.

Bibliography

Nestle. (2019). Nestle. Retrieved from https://www.nestle.com/aboutus/history/nestle-

company-history

NESTLE.ES. (2019). Nestle. Retrieved from https://www.nescafe.com/es/cultivo-

responsable

Nunez, A. (2016). Nestle Coffee Supply Chain Management.