Nestlé to tap low-income consumers

By Anita Awbi

- Last updated on GMT

Related tags: Organic growth, Business terms

Swiss manufacturer Nestlé is building new factories in Brazil and
West Africa to manufacture products for low-income families, said
chairman Peter Brabeck-Letmathe.

Speaking at a shareholder conference last week Brabeck-Letmathe said the expansion into developing markets would boost its international presence, as the world's largest food group experiences slowing sales in the European market.

International manufacturers Unilever and Danone have already started making goods for lower-income communities in a bid to tap emerging markets and a new kind of consumer.

Although Brabeck-Letmathe would not reveal which products would be produced at the new factories, it is likely the firm will develop new versions of existing products to cater for local demand.

The move forms part of a new approach to corporate social responsibility, said Nestlé.

"As stewards of large amounts of capital, both monetary and human, the unique role of business - and what no other institution can duplicate - is to create social, economic and environmental value for the countries where we operate,"​ Brabeck-Letmathe said.

"But this most challenging goal - of creating value for society - can only be successful in the long run if it has a relationship to creating shareholder value."

In April the firm said its American business delivered a strong performance with organic growth of 6.6 per cent, driven by Latin America's eight per cent growth.

Among the product groups, beverages achieved 9.7 per cent organic growth, while soluble coffee products achieved 7.7 per cent organic growth.

In February Nestlé's Americas division established itself as the food firm's most important business region for the first time following difficult conditions and subdued sales growth in Europe.

Sales across the division grew by almost eight per cent last year after "stellar performances"​ in its important emerging markets of Mexico and Brazil.

This region helped the group to a 7.5 per cent full-year sales rise to €58.3bn, while net profits grew 8.8 per cent to around €5bn.

Earlier this month Nestlé announced plans to open a $359m (€281.9m) factory and distribution centre in Indianapolis, to cater for rising demand for its ready-to-drink beverages in North America.

Related topics: Market Trends

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