How Milo nestles itself in Malaysia’s Fast-moving Consumer Goods (FMCG) Industry
Unveiling the strategies behind one of the most major conglomerate's expansion into local markets through diversifying brands
Recently, OC&C published its annual Global 50 report, ranking Nestlé S.A. first in their list once again among the largest consumer goods businesses for financial performance.
Nestlé’s dominance in the fast-moving consumer goods (FMCG) industry has been thriving despite the aftermath of the pandemic and soaring inflation, reaching record revenue growth. Despite the Swiss company’s growth in sales by 8.4% between 2021 and 2022, it’s not the success that the everyday consumer should be paying attention to, but rather its global influence that’s enabled its long-term success and survival.
Among Nestle’s extensive portfolio of over 2,000 brands, one of its subsidiary beverage brands, Milo, has exclusively penetrated the household market in Malaysia, showcasing the conglomerate’s ability to integrate in local culture and cement its sustainability in an ever-growing industry.
Melaka, Malaysia - Circa November 2019 : A muslim hijab woman browsing to buy packed Milo chocolate drinks in a supermarket.
From the outback to the rainforest
Introduced to Malaysian consumers in 1950, Milo swiftly transformed into a household staple, distinguished by its unique chocolate flavour that sets it apart from competitors. The brand's ascent to popularity is attributed not only to its distinctive taste but also to captivating marketing campaigns seamlessly aligned with the everyday lifestyle of Malaysians.
However, Milo's roots trace back to Australia, where Nestlé scientist Thomas Mayne crafted the powdered drink in 1934. Combining milk, malt, and chocolate, Mayne birthed the signature taste that would captivate taste buds worldwide. Only 16 years later did Milo make its Malaysian debut, initially positioned as a nutritional supplement. During an era when chocolate powder-based drinks were popularised for discreetly providing milk to the youth, Milo embedded itself in Malaysian society as a 'nutritious sports drink,' boasting essential vitamins and minerals.
The intriguing interplay between chocolate and sports unfolds in Milo's narrative, a departure from predominant electrolyte-based sports drinks like Pocari Sweat and Gatorade. Milo, deeply ingrained in the nation's sports heritage, has evolved over time.
Through impactful commercials and grassroots programs, Milo has propelled national athletes into successful careers, capitalising on the burgeoning sports scene with strategic sponsorships and expansive marketing initiatives. Today, Milo stands as more than just a beverage; it is a symbol deeply intertwined with Malaysia's sports legacy.
Jom Minum Milo
To illustrate, the FMCG industry plays an essential role in Malaysia, as a considerable number of consumers visit supermarkets on a weekly basis – a major FMCG sales channel compared to alternatives like E-commerce, pharmacy or minimarkets. Supermarkets are the perfect channel for FMCGs, as these products are consumer packaged goods that sell quickly at a relatively low cost. For the case of Milo, it falls under this category as many of its products have a high turnover rate, where goods have a short shelf life due to high consumer demand.
In 2022, Milo was the leading beverage brand among Malaysian consumers, with a household penetration rate of 76.1%. The brand is second only behind Maggi among leading FMCG brands in the country, which goes to show how culturally integrated these products are in the Malaysian consumer lifestyle. Stated otherwise, Milo retains significant importance in average consumer expenditure, with a CPI for coffee, tea, cocoa and non-alcoholic beverages on a gradual rise over time, with CPI currently at 116.1, an increase by 3 points from 2021.
With a legacy spanning over 70 years since its debut on Southeast Asian shelves, Milo has seamlessly embedded itself into the fabric of supermarkets, households, and restaurants. Adorned in its iconic green packaging, often showcasing an athlete engaged in sport, Milo evokes a profound sense of nostalgia among locals. Its pervasive availability, distinctive flavour, and evocative aroma create a profound link between sustenance and homecoming, effortlessly establishing the brand's dominance in the market without deliberate effort.
Tapau Takeaways: What can we learn from this?
The growth of Milo in a country as random as Malaysia from the roots of Australia serves as an example of how large conglomerates are able to diversify their products in order to penetrate local markets that are composed of different niches, cultures and personalities.
Milo's substantial growth in Malaysia, stemming from its Australian roots, serves as a compelling example of how major conglomerates like Nestlé, adeptly diversify products to thrive in local markets with diverse niches and cultures.
Nestlé's recent recognition in OC&C's Global 50 report attests to its financial strength, but it is the conglomerate's global influence that ensures long-term success. Nestlé's impressive brand portfolio can attribute its success to its strategy to not only penetrate but flourish in the Malaysian household market with Milo, showcasing Nestlé's ability to integrate into local cultures seamlessly.
Milo's strategic alignment with Malaysian culture is evident in its dominant position, boasting high household penetration rate. As the leading beverage brand, Milo's significance is further underscored by the steady rise in the Consumer Price Index (CPI) for relevant categories.
Beyond statistics, Milo's narrative intertwines with Malaysia's sports legacy, evolving from a nutritional supplement to a 'nutritious sports drink.' Through impactful commercials, grassroots programs, and strategic sponsorships, Milo not only embeds itself in everyday lives but also plays a pivotal role in propelling national athletes to success.
Milo, with its iconic green packaging, stands as a symbol of nostalgia and distinctive flavour, effortlessly maintaining market dominance—an eloquent fusion of global conglomerate strategy and local market resonance.
