Nestlé positive on Africa

7 December 2012

NAIROBI: Nestlé, the packaged food group, is heightening its focus on African markets like Kenya, Ethiopia and Angola, in the belief they hold considerable long term potential.

Ian Donald, chief executive of the firm's operations in equatorial Africa, argued that of the 21 nations falling under his purview, Nestlé was especially "bullish" about Kenya, Ethiopia, Mozambique, Angola and the Democratic Republic of the Congo.

"All the major players are here ... all the multinationals as well as some strong local players," he told Just Food. "I don't think many have been that successful yet. I think it is still very early days."

The Swiss company created a concrete business structure in equatorial Africa six years ago, and is mid-way through a three-year, CHF150m investment plan anticipating "big growth" in the future.

Donald said: "It has a very large young population, an emerging middle class [and] some significant economic developments that are going on around the region - there have been some very strong gas and oil finds and there is agricultural development.

"We just gear ourselves for the conditions of a particular market. It is obviously harder to reach thousands of individual stores than it is to get to a few large stores. But we have the skills and the capability to do that."

Despite its overall optimism, Nestlé has also come across several factors restricting growth, from logistical and infrastructural issues to legislative complexities and political instability.

"It is not a very wealthy region, it does not have a very big middle class," Donald added. "GDP per capita across most of the countries that are in this region is fairly low."

One core response has been to focus on popularly positioned products (PPP), which are often enriched with key supplements such as iron and iodine, and made available in small, cheap packs.

"PPP is more to do with getting a price point on a product that a consumer can afford. We need to make sure that we are offering products that taste good, that offer nutrition at an affordable level to the consumers that we supply," Donald said.

At present, milk powder, Maggi stock cubes, coffee and confectionery are Nestlé's leading sectors locally. Going forward, the firm will seek to enhance its portfolio as demand and affluence rise.

Donald said: "Our category offering is fairly limited at the moment. But we are already broadening in certain markets. If you went into South Africa or some of the north African countries this is already happening."

Data sourced from Just Food; additional content by Warc staff