Nestlé S.A.

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Nestlé's roots go back to Anglo-Swiss Condensed Milk Co. and Nestlé Co., which merged in 1905 to become the Nestlé & Anglo-Swiss Condensed Milk Co. Condensed milk and chocolate were the marketer's two chief early products. In the 1920s, the company added several others: malted milk, powdered beverages and powdered buttermilk for babies.

In 1938, Nestlé introduced its first non-milk product: Nescafé instant coffee. Nescafé proved so popular that Nestlé was unable to produce enough to distribute it widely, so it was initially introduced to the world market without fanfare. Nescafé was especially popular in the U.S., as was Nestea, a powdered tea introduced by Nestlé in the early 1940s. Lord & Thomas was the company's U.S. agency in the 1930s.

Company split

With the outbreak of World War II, the company split in two, one part headquartered in Switzerland and another in Stamford, Conn. Nestlé continued to produce Nescafé and powdered milk for the U.S. military throughout the war. The Leon Livingston Agency, a small ad agency in San Francisco, handled the U.S. arm of the company.

In 1952, Nestlé opened a campaign for its cookie mix and semi-sweet chocolate morsels with a four-page, color comic strip insert in American Girl, the magazine published by the Girl Scouts of America. Those ads, the first ever in the publication, were handled by Cecil & Presbrey, which won the Nestlé account in 1950.

By 1955, the U.S.-based Nestlé Co. was spending $9.5 million annually on advertising. From the mid-1950s to 1959, Nestlé marketing focused on Nescafé, Decaf, Nestea, Nestlé chocolate morsels and new-product introductions.

Nescafé fell to a distant No. 2 in the coffee category in the mid-1950s, behind General Foods' Maxwell House, which had about a 40% share compared with Nescafé's 12% to 14%. In 1956, Nestlé placed a six-page, color insert in Life tracing coffee from its discovery to the introduction of Nescafé. Believed to be the largest magazine ad ever placed in the coffee industry, it cost Nestlé $250,000. The insert featured seven specially commissioned paintings by Robert Riggs and carried a copywriter's byline for Roger Purdon, then with Bryan Houston Inc.

When Nestlé introduced Decaf, its first instant decaffeinated coffee, in 1956, it again set its sights on a General Foods brand, Sanka. The Decaf campaign, primarily in TV, first pitched Decaf as the beverage that "lets you sleep" and then shifted to the pitch that Decaf "never gets on your nerves." By 1958, Nestlé spent about $1.7 million in TV, mostly for Nescafé and Decaf.

Unlike its instant coffees, Nestlé's Nestea instant tea was a market leader, competing strongly against Standard Brand's Instant Tea Leaf and Lipton's Instant tea. In the mid-1950s, Dancer-Fitzgerald-Sample handled the Nestea account. Nestea magazine ads were visually clean and realistic, featuring a photograph of a Nestea jar and a glass of tea with ice cubes, a slice of lemon and a sprig of mint. Taglines included "Now 100% pure tea that dissolves instantly, even in cold tap water" and "Nestea is the largest-selling instant tea."

Other categories Nestlé supported with sizable ad spending in the decade included Nestlé's Quik, its chocolate line and new products. (Nestlé advertised Quik chiefly on TV and its Nestlé chocolate morsels mostly in recipe-based magazine ads.)

In 1959, Nestlé changed agencies for several of its accounts, giving Decaf and Nestea to McCann-Erickson, from DFS, and Nescafé to William Esty Co., from Bryan Houston.

During the 1960s, Nestlé's U.S. advertising budget increased to $19 million by 1969, but that increase did not keep pace with overall U.S. advertising spending. By 1969, the Nestlé dropped to No. 91 in terms of U.S. ad spending. Nescafé, which McCann-Erickson took over early in the decade and for which it developed the theme "Minute brew Nescafé," continued to be the marketer's No. 1 ad commitment.

Freeze-dried instant coffee

With the international launches of Nestlé's freeze-dried instant coffee brands, the company's coffee marketing focus shifted. In 1964, Nestlé began marketing Nescafé Gold and Nescafé Filtre freeze-dried instant coffees in Europe; it added Taster's Choice in Canada in 1966.

Those launches intensified competition in the instant-coffee segment, and in 1966, General Foods sued Nestlé for alleged infringements on its patented freeze-drying techniques. Taster's Choice overtook Nescafé as the marketer's most-promoted brand by 1969, and Nestlé introduced it to the U.S. with almost $5 million in TV spots and $1 million in print and radio ads.

Nestlé also paid more attention to advertising Nestlé's Quik chocolate and strawberry drink mixes in the 1960s. Ad campaigns for Quik focused on cute characters to attract children, including Farfel, a hound-dog puppet. Farfel and his puppeteer sang the jingle, "N-E-S-T-L-E-S, Nestlé's makes the very best chocolate." Farfel lasted barely a decade, however, and by the end of the 1960s, Nestlé introduced Little Hans the Chocolate Maker, a redhead with a mustache and lederhosen.

Nestlé continued to grow in the 1970s through acquisitions. Its advertising increased to more that $50 million late in the decade, with the majority of spending in TV.

Nestlé continued to heavily advertise its coffees, especially Taster's Choice, adding a decaffeinated version in 1971. Also that year, Nestlé introduced a version of Nescafé with chunkier crystals that more closely resembled ground coffee. Magazine ads used the tagline "We're making Nescafé more like you make fresh ground coffee." Burnett handled both Taster's Choice and Nescafé.

The marketer added to its instant coffee offerings in 1973 when it introduced Nescafé Gold Cup freeze-dried coffee, attempting to attract ground-roast users skeptical about the taste of instant coffee. "You've never tasted a freeze-dried coffee with this kind of dark, rich flavor," one TV spot for Gold Cup announced.

A severe frost in Brazil in 1975 damaged that country's coffee crop, sending world coffee prices soaring the two following years. Prices rose so significantly that consumers threatened to boycott coffee altogether. In reaction, Burnett's advertising for Nescafé emphasized cost savings; spots for Taster's Choice used comparisons.

Nestlé's Quik continued with its cute character campaigns, developing the Nestlé's Quik Bunny in 1973. In commercials, the bunny slurped down Quik and said, "You caaaan't . . . drink it sloooow." The bunny proved so popular with consumers that it remained the spokescharacter for Quik into the 21st century, though the Quik tagline changed to "Chocolate milk? Think Quik" in the 1990s.

"Take the Nestea Plunge

Nestea remained dominant in the instant tea market in the 1970s, increasing its 50% market share. Nestlé added Nestlé Instant and flavored iced tea mixes and began to offer canned and bottled Nestea iced tea via soft-drink distributors in 1971. In 1975, Nestlé aired a spot touting the results of taste tests that showed people preferred Nestea instant tea to the leading Lipton tea bag.

Perhaps the best-known campaign for Nestea was "Take the Nestea Plunge," which ran from the mid-1970s through the 1980s. Spots featured people taking a sip of the prepared drink, then plunging into a refreshing swimming pool.

Despite marketing successes in the 1970s, the decade ended with Nestlé facing an international boycott for its methods in marketing infant formula to mothers in underdeveloped nations. U.S. activists began the boycott in 1977, when Nestlé distributed free samples of infant formula in underdeveloped nations; when mothers used formula instead of breastfeeding their babies, their bodies stopped producing breast milk. Once the free samples stopped, those very poor mothers either were unable to feed their babies or, because of the cost of the formula, fed them very diluted formula, the activists said.

Nestlé's expansion continued in the 1980s and its advertising budget swelled as the company supported its newly acquired and created brands. By the mid-1980s, its advertising budget was $187 million, according to the Standard Directory of Advertisers.

Its acquisitions and new lines ranged from frozen food to chocolates. In 1981, Nestlé introduced the Lean Cuisine reduced-calorie frozen-food line from Stouffer's, which it had recently purchased. In 1988, it acquired Rowntree, the leading British chocolate marketer, as well as Italian pasta maker Buitoni.

Nestlé also invested in coffee. In 1985, it bought Hills Brothers, a large U.S. ground-coffee marketer. Other changes in Nestlé's coffee business included moving the Taster's Choice account to McCann in 1989.

In 1984, Nestlé bought Carnation, a U.S. marketer of milk, pet and culinary products. With that purchase, Nestlé entered the U.S. infant formula market in 1988, a move that once again brought criticism of the company's marketing. Carnation introduced two infant formulas to the U.S. market: Good Nature and Good Start H.A. Breaking with industry practice, the company marketed the formulas directly to mothers via TV spots and magazine ads.

The Good Start H.A. label had "hypoallergenic" printed in bold type on the front. The formula was predigested, but the company's hypoallergenic claim lured mothers of milk-allergic babies. Some of those babies had allergic reactions, and a number of leading pediatricians decried the company's hypoallergenic claim as misleading. In response, Carnation retained Ogilvy & Mather to help smooth its dealings with the Food & Drug Administration and removed "hypoallergenic" from the front of the Good Start label. (The claim remained in the fine print, however, on the back of packaging and in medical journal ads.)

In 1990, Nestlé and ad agency Jordan, McGrath, Case & Taylor developed "The Simpsons" campaign with the tagline, "Nobody better lay a finger on my Butterfinger" for the marketer's Butterfinger candy bar. The account later moved to the San Francisco office of J. Walter Thompson USA. In 1993, Nestlé ran a $50,000 grand prize contest based on the theft of the Bart character's Butterfinger, played out in TV spots. In 1998, Nestlé held "Simpsons" trivia contests on the new Butterfinger Web site and set up a "Simpsons family reunion," awarding prizes to look-alikes, sound-alikes and fans.

Another Nestlé marketing triumph, which became part of British and U.S. pop culture, was developed by McCann in 1987 for the British market to sell Gold Blend coffee. The commercials, with a running soap opera-style story line of a flirtation between neighbors in an apartment building, were a hit in the U.K., and McCann revamped the effort to reposition Taster's Choice in the U.S.

Nestlé began co-marketing with other big names such as Coca-Cola Co. at about the same time. It formed a joint venture with Coca-Cola called the Coca-Cola Nestlé Refreshment Co. to help market Nestea's bottled ice teas in traditional cola markets and via vending machines. The original "Nestea plunge" idea was revamped by McCann-Erickson; it developed TV commercials with the taglines "Taste the plunge" and "Plunge in."

Acquisitions and product moves

In the early 1990s, Nestlé bought the France-based Perrier Group and began an ad effort by Publicis Conseil SA to refocus Perrier's image into a younger, more active one. By late 2000, Nestlé was the dominant company in nonflavored bottled water.

In 1994, Nestlé moved its Lean Cuisine account to Messner, Vetere, Berger, McNamee, Schmetterer/Euro RSCG, which created the "It's Not Just Lean, It's Cuisine" campaign. Lean Cuisine continued to use the tagline throughout the 1990s, and by 1999, the line had expanded to include more than 100 entrees.

Nestlé's 1999 plant to bring the U.K.'s Willy Wonka brand to the U.S. reflected an increasing focus on the globalization of its brands at the end of the century. Other such efforts included changing the name of Quik to NesQuik, as well as a relaunch of the Nescafé brand via McCann-Erickson Worldwide, New York.

In 2000, Nestlé purchased energy bar marketer PowerBar and moved the account to Publicis, Dallas. The following year, Nestlé bought Ralston-Purina, making it the largest marketer of pet foods, as well as Ice Cream Partners USA, giving it control of the Haagen-Dazs brand. For 2001, Nestlé had $967.1 million in U.S. ad spending, essentially unchanged from 2000.

In 2002, Nestlé introduced a line extension to its Nestlé Crunch flagship chocolate bar, Nestlé Crunch with Caramel, and a line of Nestlé Crunch Minis. It also merged its ice cream business into Dreyer's Grand Ice Cream, giving Nestlé 67% of Dreyer's. Nestlé in 2003 extended its Tollhouse brand into the candy aisle with new Tollhouse candy bars. For summer 2004, Haagen-Dazs, brought under longtime Dreyer's agency Goodby Silverstein & Partners, returned to TV with a more mass approach.

In 2003, Nestlé spent $1.1 billion on U.S. advertising, up 3.7% from 2002, to rank No. 27 among U.S. advertisers, according to Advertising Age. It had worldwide sales of $65.3 billion, up 15.9% from the previous year, on earnings of $4.6 billion, down 3.5%.

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