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Nestle invests in Africa to boost revenue from emerging markets

By Mike Stones , 06-Jul-2010

The globe’s biggest food company Nestle is to invest €112.33m (CHF 150m) in the Equatorial African Region (EAR) over the next three years to grow its revenue from emerging markets.

New factories are planned for Angola, the Democratic Republic of Congo (DRC) and Mozambique and the capacity of existing factories will be expanded.

The company also plans to increase its distribution capacity in the region by opening 13 new distribution facilities and more than double its work force by creating 750 new jobs within the next two years.

Business Opportunities

Announcing the investment at a press conference in Nairobi, Paul Bulcke, Nestlé CEO, said: “Nestlé is committed to unlock the business opportunities and to promote growth in Equatorial Africa. With 400 million people and an emerging middle-class with rising purchasing power, this region has major potential for Nestlé.”

Opening new factories in the region, will provide closer links with consumers and allow the company to better adapt its products to their taste and nutritional needs, he added.

The company pledged to source local products, create new local employment and help further development of the region.

Nestlé EAR is to spend €29.93m on a new factory in the Congolese capital Kinshasa slated to produce culinary and coffee brands including Maggi and Nescafé 3-in-1. Other products in the dairy, beverages and coffee categories will be tailored to suit local market needs. It will also expand its distribution centre in Kinshasa.

The company plans a €22.44m new factory and distribution centre in Beira, Mozambique. This factory will help to meet increasing demand for culinary and coffee and other beverages for the host and neighbouring countries.

In Angola, a €18.70m new factory will be built. In Kenya, Nestlé is investing €22.44m in the expansion of its Nairobi factory. This will include a new production line to support its newly-launched food service division, Nestlé Professional. The factory will supply Kenya, Uganda, Tanzania, Rwanda, Burundi, Eastern Democratic Republic of Congo, Malawi and Zambia.

Regional markets

In Zimbabwe, Nestlé will expand and upgrade its Harare factory in order to boost production capacity and help supply other regional markets such as Zambia and Mozambique.

Frits van Dijk, Nestlé Executive Vice President responsible for Zone Asia, Oceania, Africa and Middle East, said: “Our strategy in the region is based on a specific business model that supports local sourcing of raw material, production and distribution of our products. Following this strategy, we recently launched products like Maggi cubes and Nestea, and also re-invigorated and re-launched our Milo brand in the EAR market.”

Nestle expects sales from emerging markets to grow from its current level of about 33 per cent to 45 per cent within 10 years.

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