đœïž Giants at the dinner table: NestlĂ©, Unilever & Co. - Who serves up the greatest success?
Company presentation
Nestlé, founded in Switzerland in 1866, is today the world's largest food company, with products ranging from baby food to coffee and pet food. Unilever was created in 1929 through the merger of a Dutch margarine manufacturer and a British soap producer and is now a global giant in the consumer goods sector. Coca-Cola, founded in Atlanta in 1886, is the world's leading beverage producer. PepsiCo, founded in 1965, is not only Coca-Cola's biggest competitor in the beverage market, but also a major player in the snack segment. Mondelez was founded in 2012 following the split-up of Kraft Foods and focuses on snacks and confectionery.
Historical development
$NESN (-0.11%)
has developed into a diversified group over the decades through strategic acquisitions such as Maggi (1947) and Purina (2001). $ULVR (+1.18%) It also grew through significant acquisitions, such as Bestfoods (2000), but also had to shed business areas such as the frozen food segment (2006). $KO (+0.71%) and $PEP (+0.4%) have been competing intensively for decades and have increasingly expanded their portfolios. $MDLZ (+0.82%) has only been operating as an independent company since 2012, but benefits from its long tradition and experience. $KHC (+0.5%) .
Business model and core competencies
Nestlé relies on an extremely broad brand portfolio and a global presence, with a particular focus on powdered and liquid beverages, especially coffee. Unilever has a strong position in personal care, household cleaners and food. Coca-Cola and PepsiCo dominate the global beverage market, with PepsiCo additionally diversified through a strong snacks business. Mondelez, on the other hand, focuses on snacks and confectionery, with globally recognized brands such as Oreo.
Future prospects and strategic initiatives
All five companies are placing greater emphasis on healthier and more sustainable product offerings. Nestlé is increasingly investing in personalized nutrition and health services. Unilever is driving sustainability initiatives and focusing on high-growth areas. Coca-Cola and PepsiCo are expanding their portfolios to include sugar-free and functional beverages. Mondelez is focusing primarily on growth in emerging markets and the expansion of e-commerce.
Market position and competition
| Nestlé | Global | Broad portfolio, strong brand awareness | Growing demand for healthier products |
| Unilever | Global | Strong presence in emerging markets | Competitive pressure in mature markets |
| Coca-Cola | Global, USA | Market leadership in the beverage segment | Declining soft drink consumption |
| PepsiCo | Global, USA | Strong snack business | Dependence on a few key brands |
| Mondelez | Global | Leader in snacks and confectionery | Low product diversification |
Total Addressable Market (TAM)
The global market for packaged food and beverages, in which all five companies operate, is estimated at over USD 3 trillion. Driven by population growth and rising incomes in emerging markets, a significant increase is expected to continue.
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Conclusion
Since all companies operate in the same industry but have different focuses, it can make sense to include several of them in the portfolio. If you compare Coca-Cola and PepsiCo directly, Coca-Cola looks like the stronger company. The situation is similar with Unilever and Nestlé, where Nestle looks stronger. Nestlé's stake in L'Oréal means that it also has the care products sector in its portfolio, which makes Nestlé appear to be an even more attractive company.
So if you opt for Nestlé and Coca-Cola, you already cover a considerable part of the industry and have two strong companies in your portfolio.
If you are looking for a company that offers the broadest coverage, the choice clearly falls on Nestlé. Overall, these are companies with attractive capital efficiency and solid fundamentals, some of which have been delivering consistently strong figures for years.
My personal choice is only Nestlé, mainly because of its broad diversification and long-term high capital efficiency, which has been above 10% for almost ten years. With the new management, there is also hope for improved share performance.
I am keeping an eye on Unilever, especially now that the management has embarked on a strategic change of course. However, I am still holding back at the moment as the company has missed many opportunities in recent years. I would first like to see whether the current team is able to implement the necessary changes. However, the spin-off of the ice cream business could make Unilever more attractive again.
As for Coca-Cola, I hardly see how the company could justify its current valuation, which is why I am out. However, its stake in Monster is a positive aspect, which keeps the margin attractive.
I find Pepsi Co and MondelÄz completely unattractive at the moment despite solid numbers, but who knows what the future holds.
