Nestlé sets its sights on Africa

12 July 2010

VEVEY, Switzerland: Nestlé, the food group, is set to heighten its presence in Africa over the next three years, as it seeks to tap in to growing levels of demand in the region.

The Swiss firm will direct extra funding to the tune of $141m (€111m; £92m) to Equatorial Africa in this period, strengthening its operations in nations like Kenya, Congo, Mozambique and Angola.

"We have been here for many years. We are deepening and accelerating our investment in the continent...There are good opportunities here," said Paul Bulcke, Nestlé's chief executive.

"We will be more than doubling our workforce, creating 750 new jobs. If more companies make similar investments, we will empower consumers to spend more, boosting demand for goods."

Nestlé's African sales reached $2.9bn in 2009, only 3% of its global revenues, but the owner of Nespresso and Perrier believes the financial recovery in this market will be faster than in much of Europe.

Nescafé coffee, Maggi seasonings, the babyfood Cerelac and Nido milk powder are among brands already well-established in East Africa.

The organisation posted a 6.7% uptick in its turnover in Asia, Oceania, and Africa last year, outpacing the expansion of 6.5% recorded in the Americas and the improvement of 0.3% generated in Europe.

Bulcke argued that developing items specifically for shoppers in Africa would be essential to achieving success.

"We have what we call popularly positioned products," he said.

"Sometimes large companies have the tendency of bringing in products from the developed market which end up appealing to a small fraction of the population."

While expressing optimism about Nestlé's prospects, Bulcke also suggested there were challenges to be overcome.

"Africa has seen general economic growth and this usually goes hand in hand with political stability. Is there a risk? Yes, there are risks everywhere," he said.

"We are looking at the long term, which is why we are making these investments."

Data sourced from Business Daily; additional content by Warc staff