Business Times

Nestle eyeing new segments in SL

By Duruthu Edirimuni Chandrasekera

Nestle Lanka PLC (Nestlé’s) is eyeing new segments to venture into in 2012, according to officials.
“There’re many opportunities for Fast Moving Consumer Goods (FMCG) firms - especially now with the economy growing quite fast. We are always evaluating opportunities. In this light, we are eyeing new segments (to get into) in 2012,” Alois Hofbauer, Managing Directors Nestlé’s told the Business Times.
He pointed out that Nestle has started catering to the ageing population in terms of healthcare nutrition in the country. “This is slated to become a big area and we are starting to build our competencies here,” he added.

He noted that while the company is making money on all their products it will more than double production capacities in the next five to seven years with Rs. 10 billion investment “Of this, we already invested Rs. 2 billion,” he added. The company’s main products, including; liquid and malt beverage, coconut milk and other instant food, are all marketed under established brand names such as Nestomalt, Nespray, Maggi, Milkmaid, Milo, Nescafe, etc. Around 90% of its topline is made from its manufacturing facility in Kurunegala with the remaining items such as the infant milk formulas, Nescafe and breakfast cereals being imported for distribution.

Nestlé’s collects 50 million coconuts each year from 5,000 local farming families. “We are the largest exporter in powdered coconuts in the world, which many aren’t aware of. We export to more than 60 countries,” Mr. Hofbauer said, adding Middle East, Canada, Switzerland, France, Japan and the latest being Brazil are some of the countries the company exports coconut products to.

He said that the high duty on imported milk powder by the 2012 budget which is to be maintained to enable dairy farmers to secure better prices will not have an impact on Nestlé’s bottomlines. Analysts said that Nestle will continue with its tax structure related to the import of its infant milk category, but will prove to benefit with its strong hold of 1,100 liquid milk collection points across the island.
Mr. Hofbauer said that the 2012 budget is a lot about consistency. “There’re many good incentives for investments in the budget. While the exchange rate depreciation is a good thing, it's also a challenge. As a coconut milk powder it’s a good thing, but then again as an importer of certain products, we need to manage,” he explained.

Noting the recent trends in the FMCH market, he said that there’s both an extension as well as an expansion. “We saw lower income groups shifting to more disposable income levels in the last two years (post war)," he explained, adding that with the rising confidence, the middle income market has also risen.

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