Nestlé takes long term view in Africa

02 August 2012

JOHANNESBURG: Nestlé, the food group, is aiming to attract shoppers at various pricepoints across Africa, in recognition of the fact affluence levels remain highly stratified.

The organisation plans to open a factory in Angola next month, meaning it will have 30 regional plants. It began selling products in Africa 130 years ago, and has invested $1.2bn there in the last five years.

"People used to characterise Africa only in terms of poverty. Today, Africans are building strong economies and looking to companies like us to be their partners," Nandu Nandkishore, zone director for Asia, Oceania, Africa and the Middle East, said.

In evidence of this, Nandkishore pointed to statistics showing that Angola, Nigeria, Ethiopia, Chad, Mozambique and Rwanda were among the ten fastest-growing economies of the last decade.

However, he also warned Africa was a "continent of immense contrasts". In the first instance, while the number of people living on $1.25 a day has dropped to 47.5% in sub-Saharan Africa, according to the latest figures, this still equates to 386m individuals.

"There are no short term solutions to these challenges. At Nestlé we've always believed the best way we can contribute to unlocking Africa's potential is by taking a long term view," Nandkishore said.

Equally, estimates from the African Development Bank suggest the middle class is quickly expanding, and will incorporate 1bn people by 2060, or 42% of the region's citizens.

"We've adopted a multi-tier strategy to make our brands available to consumers across socio-economic segments in all 54 countries in Africa," said Nandkishore.

As such, Nespresso, the premium coffee brand, has proved especially popular with South Africa's urban professionals, and Mövenpick, a high-end ice cream, has seen strong demand in Egypt.

By contrast, the firm's "popularly positioned products", like Maggi bouillon cubes, fortified with iron, are both affordable and aim to combat widespread nutrient deficiencies.

Urbanisation is also rising rapidly in Africa from the current total of 40%, and Nestlé Professional runs schemes in Central and West Africa hiring and training street vendors to sell Nescafé in busy areas.

This effort has helped the company tackle youth unemployment. At present, Africa boasts the world's youngest population, with 200m people aged 15–24 years old, an amount which is set to double be 2045.

Data sourced from Nestlé; additional content by Warc staff