Nestlé’s successful efforts have helped the company build iconic brands in the non-alcohol beverage category that have become fixtures in communities around the world. In particular, Nesquik and Juicy Juice are leading brands in the United States, marketed by Nestlé USA, part of Nestlé S.A., and are touted as the No. 1 flavored milk brand and the No. 1 kid’s juice brand by the company.

Finding itself in a changing beverage marketplace, Nestlé USA is setting out to change the way these brands are packaged, distributed and seen in the marketplace. Over the past five years, the team at Nestlé USA’s Beverage Division, based in Glendale, Calif., has been putting together the details and planning out the strategic steps for the revitalization of its brands, and now, the wheels are in motion.

This transformation, says Rob Case, president of the Beverage Division, comes as a result of changing consumers who are looking for products positioned around health and wellness, value (but not in just the monetary sense) and products that are available for immediate consumption.

Nestlé, in its efforts to meet those consumer preferences, has made hefty investments—close to $1 billion, Case notes—in the areas of technology, its route to market and product innovation.

At the heart of this game-changing initiative is Nestlé’s Anderson, Ind. LEED certified factory and beverage distribution plant, which brings the production of ready-to-drink Nesquik flavored milk and Coffee-mate Liquid, a non-dairy liquid coffee creamer, in-house for the first time. (Previously, it had been done by a network of co-manufacturers.) This is the first facility in the United States to receive FDA approval for PET aseptic production and the largest Nestlé ready-to-drink aseptic products factory in the world—a major technological coup for the company.

“One key innovation here is that Anderson is capable of producing aseptic products, which allows us to tap into new distribution channels that we didn’t have before because the shelf life of the products are longer,” says Hernan Pereira, vice president of manufacturing for the Beverage Division. With this proprietary technology, Nestlé can produce shelf-stable Nesquik in PET, giving the brand a competitive advantage in the on- and off-premise where consumers are picking up beverages on the go. Nestlé recently introduced a new 8-ounce PET of Nesquik white milk with added vitamins and minerals, for example, for distribution exclusively at Wendy’s to coincide with the quick service restaurant’s kid’s menu.

Originally packaged as a powdered mix, Nesquik’s liquid format has continued to perform increasingly well, notes Pamela Krebs, manager of division and brand affairs for the Beverage Division. RTD Nesquik was introduced in the US in 1984 and has become the top national brand of 100 percent flavored milk—notably chocolate milk—with the largest distribution, share and brand awareness, Nestlé reports.

“As people switch more to on-the-go consumption… the liquid and ready-to-drink versions of [Nesquik and Coffee-mate] grew in proportion,” says Krebs. “We needed manufacturing facilities that could handle the greater need and desire for our ready-to-drink products as well as give us additional opportunities for new products while expanding within Nesquik and Coffee-mate.”

Nestlé invested $500 million in the Anderson facility—the company’s single largest capital investment—and plans to invest another $170 million by 2011. Phase I of the project, 880,000 square feet, was completed in May 2008 and Phase II, 220,000 square feet, is slated to begin commercial production later this year. This facility not only provides the capability of handling increased production with five production lines able to handle a variety of package sizes, but also room for the production of future products as well.

Krebs notes that the location also had a role in the planning of the new facility and distribution center, pointing out that Anderson is positioned in the central United States to help support the company’s new route to market approach.

Nestlé has put in place its own distribution system and has been working with a network of about 280 distributors and counting located across the country since August. To support those distributors, more than 100 direct sales people have been hired. Prior to the opening of the Nestlé Anderson facility, Nestlé relied on its network of co-manufacturers to distribute Nesquik RTD and Coffee-mate Liquid.

“We felt that these distributors could provide not only the breadth of distribution we were looking for, but also spend time with our products in the retail environment, merchandise our products, get us better shelf placement and greatly enhance the presence of our brands,” Case says.

This distributor model allows the company to reach an out-of-home consumer shopping in C-stores and “up and down the street” retailers, specifically moms and young teens—the target market for Nesquik and Juicy Juice.

The innovation behind these two brands is the third focus of investment for the company. To help drive that innovation, Case put together what he refers to as an “innovation team” of about 15 employees two years ago. The team is “cross functional,” he says, representing marketing, sales, manufacturing, supply chain, finance and research and development.
“[The team’s] sole mission is to develop innovation that we can put through our new route to market and leverage the strength of our new route to market to get these new experiences in front of the consumers,” he says. “Ninety percent of our innovation platform is focused on nutrition, health and well-being to give consumers more value for their dollar.”

Last year, the company introduced three new products for the brands—Juicy Juice in 10-ounce PET, Juicy Juice Sparkling and Nesquik 100-Calorie Chocolate Milk.

“One trend that we’ve seen is the consumer shift toward more natural, more simple ingredient statements and less artificiality, particularly among the core consumer for Nesquik and Juicy Juice, which is mom,” says Kim Peddle-Rguem, director of marketing for the Beverage Division. “We know mom wants to put something nutritious in the lunch box; she wants to have something nutritious in the pantry or fridge for her kids to consume, and so we are cognizant of that.”

The new 10-ounce serving of Juicy Juice is designed to provide growing children, those for example entering the fifth or sixth grade, with a larger portion of juice compared to the brand’s smaller juice box packaging. With mom in mind, the company sought out to create brand extensions that spoke to health and nutrition. So, verbiage on this new package emphasizes “all natural,” “100 percent juice” and “no sugar added.”

Juicy Juice, a brand that was founded in the ’60s and was later acquired by Nestlé, has grown to become a leader in the kid’s juice market. With this new package, available in three flavors, Apple, Berry and Punch, the company hopes to continue to be mom’s juice choice for her children.

Another innovation is Juicy Juice Sparkling, 8.4-ounce slim cans of 70 percent fruit juice and 30 percent sparkling water. These drinks also are 100 percent natural with no artificial flavors, colors or sugars added. Offering 90 calories per can, Juicy Juice Sparkling, available in Berry, Apple and Orange flavors, contains the equivalent of one serving of fruit.

“This allows children who are between the ages of 10 and 15 to still have products that are natural and good for them with nothing artificial, but in a fun and experiential way,” says Peddle-Rguem.

Krebs adds, “We certainly feel this is the age range when kids are starting to turn to sodas and we are able to offer them a more nutritious option that’s still fun to drink.”

Nesquik 100-Calorie Chocolate Milk, sweetened with sucralose, is a low-fat milk offering 30 percent of the recommended daily value of calcium and 8 grams of protein per 8-ounce serving.

Concerns among consumers who traditionally drink chocolate milk, which include those young and old, are portion control and calorie intake, notes Peddle-Rguem. To better meet the needs of those consumers, Nestlé introduced a lower calorie, smaller 8-ounce PET package. Nestlé is offering an 8-ounce PET package in chocolate milk, 100-calorie chocolate milk and 8-ounce PET 4-packs in grocery stores and single-serve packages in C-stores.

Though Nestlé Beverage has distinct plans to make investments that will continue to drive innovation and R&D within the company’s brand portfolio there are plans, notes Case, to invest in additional opportunities as its route to market model becomes a visible force in the marketplace.

“I expect by the end of 2011 we will have at least two major new product launches going through our new system,” he says. “We are looking aggressively to bring on and to invest behind new businesses that open up new territories, not only for us, but for our distributors and our customers. These investments will be in the area of nutrition, health and well-being. We’re very committed as a company and as a division within Nestlé to that.”

The Stats on Anderson

Sustainable Design
• Features include improved recyclability of resin packaging, a wastewater recovery system for reuse in cooling towers and use of low-emission natural gas boilers.

Did You Know?
• Approximately 30,000 cows need to be milked each day to supply Nestlé Anderson with the 1 million pounds of milk
needed to make Nestlé products.

Beauty from Within
In correlation with Nestlé’s investment in R&D and product development based around nutrition, health and well-being, the company created The Explorer Program, a program that allows employees of the company to pitch new ideas for products. Kim Cooper, now the chief beauty officer of a product called Glowelle, conceptualized the idea for this beverage that taps into the trend of beauty-from-within.

Glowelle, which launched at the end of 2008, was more than two years in the making, notes Cooper. Glowelle is a dietary supplement that is designed to help reduce the signs of aging while promoting even skin tone and a “healthy-looking glow.” The product, which is available in 8-ounce RTD bottles and stick packs in Natural Pomegranate Lychee and Natural Raspberry Jasmine flavors, is formulated with more than a dozen antioxidants derived from different vitamins, botanicals and fruit extracts including maritime pine bark, coenzyme Q10, green and white tea extract, quercetin, beta-carotene and pomegranate extract.

A self-proclaimed “beauty junkie,” Cooper was looking to make a beverage that not only worked, but fit into her lifestyle. “I wanted to make the perfect drink for myself and other women that I know who are looking for ways to improve their skin,” she says.

Glowelle is backed by a clinical trial where key findings were: the product helped to protect skin from the effects of moderate sun exposure, increased antioxidant activity, which may help slow down skin aging, and helped to even skin tone.

Targeted toward women between 25 and 60, Glowelle is sold in Neiman Marcus, on glowelle.com and in select high-end spas.

“We support whole heartedly Nestlé’s nutrition, health and well-being focus and this is another way we are able to communicate that to consumers, and in an authentic way because it was something that was a personal passion of mine and a personal passion of our team,” Cooper says. —J.C.

From Beverage World June 15, 2010