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Nestlé deepens supply channels for wider reach
PHOTO | JENNIFER MUIRURI Nestle Equitorial African region director Ian Donald speaking during the interview.
What you need to know:
- The firm which has in the past three years scaled up its investment on the continent eying a share of the growing middle class, is also surveying what products it can introduce locally from its global portfolio
- The firm is, however, yet to decide on whether to set up milk powder processing plant to reduce its over reliance on imports
- In 2010, the firm announced a Sh11.5 billion investment in the region as part of an expansion drive characterised by building of new factories and strengthening distribution chains
Swiss food conglomerate, Nestlé, is now turning to deepening its distribution network in the region following the completion of a Sh2.3 billion upgrade of its factory in Nairobi.
The firm which has in the past three years scaled up its investment on the continent eying a share of the growing middle class, is also surveying what products it can introduce locally from its global portfolio.
“Distribution depth of our products is still very low and our priority now is to ensure that our products are widely available in all the countries we operate in,” Nestlé head of Equatorial African region, Mr Ian Donald, told Smart Company in an interview.
He oversees the firm’s business in 21 African countries from its head office in Kenya.
The firm is, however, yet to decide on whether to set up milk powder processing plant to reduce its over reliance on imports.
Nestlé buys about 20 per cent of Kenya’s total coffee output from the open market to produce its flagship Nescafé coffee brand but still imports milk powder to use as a raw material.
“We are not processing at all at the moment but we would very much like to. We are looking at all options which would work for us. The considerations would be if there is enough milk locally, if an investment of a powdered milk production plant would be viable and where it should be located if we should put it here and so on,” said Mr Donald.
It also plans to replicate the success it has seen going into smaller packages and sachets, which it began with Nescafé, in a bid to encourage consumption among low-income customers as it deepens its foray into the mass market.
Its current products in Kenya include Nestea, a ready to drink blended mix of Kenyan tea and Milo, a chocolate flavoured beverage. Others are Nido, a milk powder and Cerelac, a baby food.
The firm has, however, shrugged off the impact of recent passage of a law in Parliament barring the advertisement of baby milk supplements on its sales on grounds that it has always supported such laws.
It is, instead, focusing on increasing its capacity to source raw materials through partnerships with farmers to assure it of a ready and stable supply.
“We are increasing our ability to source raw materials and packaging materials locally as much as we possibly can. Our biggest priority is trying to get costs out of packaging,” he said.
In 2010, the firm announced a Sh11.5 billion investment in the region as part of an expansion drive characterised by building of new factories and strengthening distribution chains.
It recently built two more factories, one in Angola and another in Congo, to bring them to four in Equatorial African region as it moves to increase its market share on the continent. The other plants are in Kenya and Zimbabwe.
“We are very positive about the future, we see very strong growth opportunities across the region,” he said. Emerging markets including Asia, Oceania, and Africa are some of its fastest growing zones, delivering double-digit growths.
