Nestlé Eyes Low-Income Markets

17 July 2006

VEVEY, SWITZERLAND - The globe's largest food company, Nestlé, last week announced a surprise diversification into products for low-income consumers in the developing world.

The company, which operates in almost 200 countries, revealed it is building a new factory in north-eastern Brazil, specifically to manufacture goods for the low-income population.

Nestlé chairman/ceo Peter Brabeck declined to identify which foods or beverages would be manufactured at the plant or how these might differ from the firm's existing range.

However, he said the move was part of a broader initiative to identify new products and unconventional channels to expand sales internationally.

Nestlé is facing a deceleration of growth in the developed world, with food sales in the west hit by factors such as declining birth rates. Sales in the globe's more prosperous regions are forecast to rise by only about 1.5% annually, while Nestlé has targeted organic growth rates of 5%-6% a year.