By Edward Attwood
Food giant to launch Saudi JV next year, sees doubling of sales in region by 2017
The world’s biggest food and beverage company, Nestle, will invest $400m in the Middle East over the next three years, senior officials at the firm have said.
Speaking at the opening of a factory in Dubai – Nestle’s first new confectionary manufacturing facility built anywhere in the world for more than a decade – the company said it also had plans to double its business in the region by 2017.
“The Middle East region, with its 200 million inhabitants, holds great promise for us, and has seen steady growth over the years,” Paul Bulcke, Nestle’s CEO, told reporters.
“Last year, the Middle East contributed approximately $1.5bn to the group’s turnover. We have invested close to $500m in this region since the formal inception of Nestle Middle East in 1997.”
Bulcke said that emerging markets contributed around 35 percent of group turnover, and that he was planning to raise that figure to 45 percent “over the coming years”.
“The objective we have is to double our business by 2017 around the region and reach $3.3bn – this requires slightly above double-digit growth,” said Nestle Middle East chairman and CEO Yves Manghardt.
One element that will help us next year is the set-up of a joint venture in Saudi Arabia – we will be the first international player to handle sales and distribution ourselves, and this is really a pioneering task, helping us… to handle our business directly.”
The Middle East makes up between 1.5 and 2 percent of overall global sales, although Nestle’s executive vice president of Asia, Oceania, Africa and the Middle East Frits Van Dijk said local growth was expected to increase faster than group growth.
Van Dijk also said that the firm’s sales in the UAE amounted to around $200m, but was non-committal about future acquisitions in the region.
“Our philosophy is that if we see opportunities to either strengthen or position in a certain country or category, we would look at acquisitions, or if it would allow us to enter a new category or new distribution system,” he added.
“But we have today no specific targets. We are looking at acquisitions as an additional way to grow, the priority is clearly on organic growth.”
Nestle sells a billion products every day to global consumers.