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Digitization is an ongoing issue and the momentum has to come from the top down

Michel Jüstrich, CEO Nahrin AG, on customer dialog, sales models in 20 countries and why direct sales is still the most reliable business model even in the age of digitization.
Nahrin CEO Michel Jüstrich sitting at a table
"Direct dialog and the Internet don't contradict each other."

Mr. Jüstrich, with locations in Sarnen and Berneck, Nahrin AG produces and markets food and dietary supplements. What is the most popular product?

Michel Jüstrich: Our best known product is vegetable bouillon. However, our multi-vitamin products in the dietary supplement area have become our number 1 products. Foods and dietary supplements are developed, produced and marketed in Sarnen. In Berneck we have a development and production location for cosmetic products. In Switzerland, Nahrin has a perceived market share of 2/3 for cooking products and 1/3 for supplement products. In reality, the percentage ratio is 50:50. The market share abroad is 30% for cooking products and 70% for supplement products.

How would you describe Nahrin's business model in your own words?

In brief: "direct sales of healthy, high-quality products."

Why is direct dialog between the manufacturer and the customer necessary in the nutrition area? Don't customers today get most of their information from the Internet?

Direct dialog and the Internet don't contradict each other. Dialog also happens on the Internet, in contrast to retail, for example. I also don't think that digitization replaces dialog, because people have a fundamental affinity for communication. Personal contact and a personal element will always be necessary. An example: If you get a restaurant tip from a friend, then you'll go because you can trust a friend. If you read a digital report about a restaurant with 200 likes and 700 dislikes, it might help, but you would tend to rely more on the ratings numbers. People still place a great value on the personal touch and we see that in our business.

What is direct dialog with customers like at Nahrin?

There's not as much of it as there was when representatives used to go door-to-door presenting products. Today, consultants mostly advise customers, make appointments and stop by to introduce products. During these conversations, the consultants sometimes get very close to the customers and are confronted with questions and problems for which they need to give answers. If the consultant doesn't have answers for everything, then he can pass along any open questions to the company and get an answer there. The consultant doesn't just make something up because he wants to keep the customer's business. In this sense, direct sales provides the customer with serious consultation. The customer also has the guarantee that the products are of a very high quality, particularly in Switzerland. In this, customers cannot purchase poor products with direct sales. No company can afford that.

How important are the Internet and digitization for Nahrin today?

These developments are definitely very important for us. Our sales force travels with tablets that they can use to access all of the information online. The salesperson takes orders on-site and sends them to the company and then go directly into our system. After the typical cross checks such as a credit check and a review of outstanding debts, the order goes through automatically. Our WebShop is tip-top as well. Online ordering is easy and the products are delivered quickly. The WebShop is a new, convenient way of placing orders that provides a supplement to the telephone, which is still used quite commonly as well. We operate our WebShop only in Switzerland because we don't want to send products abroad. For this reason, all of our country organizations operate their own WebShops.

Do they each have their own WebShop solutions or do you also use major platforms like Alibaba and Amazon in other countries?

We always create our own WebShop solutions. We also use proprietary solutions abroad and not other platforms. Not just because we have experience with it, but because otherwise we would completely undermine our consultants.

How has the size of the sales team changed in the last 20 years?

Our sales organization in Switzerland has stayed about the same size. Of course, today the team is supported by digital media. This gives the customer relationship a personal touch in dealing with the broad range of available information, even when a consultant has 600, 1,000 or 1,500 customers to serve. Internationally, we've grown significantly.

Nahrin is active in around 20 countries. What new markets are currently on the radar?

At the moment, we're focused on the Arab countries. We're also taking our first steps into the Chinese market. Several years ago, we made an attempt in China, but it didn't work out. Now we are confident that we can do it better.

What is Nahrin's approach to entering new markets?

One way is getting an idea about potential new markets at trade shows, another is working with agencies that support us in choosing partners. We also get direct requests, often through digital channels. For instance, our current initiative in China was started by a request from a Chinese person who was doing an Internet search for good, health-oriented niche products from Switzerland. Trade shows are becoming less important because it's easy to find a lot of key information about markets online. For this reason, we have to make sure that our web platform is designed in a way that allows people to find us when they're doing searches. We still have a lot to learn in that area.

What are the decisive criteria when Nahrin evaluates new markets?

We ask the following questions: What is the purchasing power? What is the acceptance level for natural products? What is the people's attitude toward nutrition and health? What are the relevant consumer habits? How much do people like Switzerland and Swiss products? And because of the fact that we are somewhat expensive due to the superior ingredients we use in our products: What is the degree of price elasticity? Based on the answers, we create a matrix. This is, for instance, how we decided to pursue the Arab countries.

...though that region isn't really known for low-salt and low-fat foods, is it?

That's true. For that reason, the focus for these markets isn't on our cooking products, but primarily on our nutritional supplements and secondarily on our cosmetics.

What are the differences among the Nahrin sales models in the 20-something different countries?

In Switzerland, we have a somewhat rigid direct sales system with our salaried consultants. Abroad, our direct sales system is more free; it's more in the direction of a demonstration or party system. The further east, the more digitization: one-to-one selling with strong Internet support.

The nutritional supplement industry is subject to trends. How does Nahrin deal with them?

Of course, we follow these trends. In our direct sales, we hear a lot of echos from the market. The customers tell us clearly what they do and don't want. We also get information at trade shows, on the Internet and through contact with our raw material producers. We filter out things that we think a reasonable amount of people are interested in. We also offer products for specific customers such as vegans, vegetarians, and people who are lactose or gluten intolerant. We try to stay abreast of new trends. However, we always follow our basic principle, which is that our products have to taste good and be enjoyable.

Swiss SMEs are engaged with Industry 4.0 and digitization. In your opinion, do Swiss SMEs need to change their business models in response to these things?

We try to take advantage of digitization in all areas where it can improve and simplify processes. We've already realized a number of aspects of Industry 4.0 that other companies are just starting to talk about. Communication with suppliers and customers is intensifying. We run into obstacles where suppliers aren't yet as far along as we are. It's been a great help to us that we are very internationally active and that we've had to develop efficient communications with around 350 raw material suppliers. Internally, digitization has led to streamlining measures. We do everything that's necessary and that makes sense. In sales, you can see the influence of digitalization with the tablets that our consultants use. In my view, digitization is a question of company culture and has to be put into practice. We have to provide the momentum from the top down. If we miss this train, we're soon going to have a big problem. The challenge is to keep pace with the developments both as a culture and as a business. In my view, the biggest problem is with people who are 45+, from a generation who think they understand the new developments and technologies but are actually far from even being able to use all the features of a smartphone. If one underestimates digital developments and their effects, then it causes problems.

How do you deal with this issue at Nahrin?

By providing internal support and by creating space for employees to learn. It's important that people be open and ready to consider new things. It's also necessary to establish an error-management culture. We can't have employees making mistakes because they can't learn new things. If employees can't adopt a new orientation, then the company will be full of people who can't keep up. In order to prevent such a situation, we do things like organizing internal projects in a way that advanced employees are working together with employees who still need to grow. Digitalization has also been an ongoing issue at executive meetings for the past two years.

How will digitization change the food industry?

Digitization probably won't have such an incredibly big effect on the food industry. It will, of course, have a big influence on buying behavior and opinion making. To some degree, products will be more individualized according to customer requests, which I can certainly see happening in the supplement area. But I don't think that the food industry will be on the front lines of any disruptive changes.

About Nahrin

Nahrin AG is a Swiss family owned company founded in 1954 and based in Sarnen, Obwalden. It is focused on manufacturing and marketing food products and dietary supplements. The company develops and produces all of its own products, from the research phase to the final sale. Today, Nahrin is one of the largest direct sales companies in Switzerland.

About Michel Jüstrich

A member of the third generation of Hansruedi Jüstrich's family line, Michel Jüstrich has been leading the family owned company for 20 years. After his studies at the University of St.Gallen and a period working at Hilti and SFS, he joined Nahrin AG 21 years ago and has been leading the company since 1998. Michel Jüstrich established the direct sales company ANiFiT (animal food) 15 years ago. He acquired one of the leading OTC companies, Similasan (leader in the area of eye care products). Michel Jüstrich is married and is a dedicated family man as well as an avid sports fan.

Would you like to learn more about how export orientated SMEs are adapting to the digital transformation and rethinking their business models? More on this topic at this year's Forum for Swiss Foreign Trade.

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