CAIRO: The world’s largest food and beverage company, Nestlé will expand operations in Egypt by investing LE 450 million in 2011, an executive said at a conference Tuesday.
Nestlé will invest an additional LE 500 million over the next three years to expand existing factories as well as add new distribution centers, according to Fritz Van Dijk, executive vice president of Asia, Oceania, Africa and Middle East.
“This investment will allow the company to add 500 more jobs to its existing 3,000 workforce in Egypt,” said Van Dijk.
Currently in Egypt, Nestlé has two factories in Sixth of October and one water factory in Banha as well as three main warehouses and seven distribution centers.
“We have full confidence in the people and country of Egypt and their capabilities. It is the right time to make more investments here,” he added.
Van Dijk also pointed out that in the latest issue of the Economist, Egypt was classified as one of the “new emerging markets,” which he believes will only attract more investments to the country.
He attributes their long standing history in the country and their Popularly Positioned Products (PPP) business model to their success and growth.
The PPP model is an in-depth look on the needs of emerging consumers and products geared towards their desires. In Egypt’s population of about 80 million people, half of the market is made up of people under the age of 20 and also boasts an emerging middle-class and lower-middle class with growing purchasing power.
“We want to ensure our products translate to the people and are sustainable in nature as well as creating value for the society and the company; turning our vision into reality,” said Suresh Narayanan, region head of Nestlé North East African region.
The sourcing of local materials allows the company to keep their prices low, but is currently experiencing a short term challenge of commodity costs increasing with an imbalance in supply and demand.
Narayanan told Daily News Egypt that they experienced this in 2007 and 2008, but with the 30 to 40 percent increase in commodity costs, the company will have to absorb the increase.
The company utilizes 25 to 30 percent of their sales from Egypt to turnover and invest right back into the country.
On top of their investments in Egypt, Nestlé is also bringing various philanthropic programs. Their first was “Be at your best,” introduced two years ago in Egypt.
The nutritional awareness program targets mothers to increase their knowledge of the best food and beverage products for their kids and families. The program includes seminars as well as a call center to answer any nutritional inquiries.
“Healthy kids” is their second program that was introduced in late December 2010 and has already reached 50 schools in the Greater Cairo area. They have worked with 40,000 students in 1,000 classes to date in Egypt.
“The most important single voice comes from kids and if they are informed, awareness spreads,” said Petraea Heynike, Nestlé executive vice president of strategic business units, sales and marketing.
“These programs are in line with our mission of created shared value,” she added.
Heynike said they are hoping to reach 80,000 students in 100 schools this next year and have the program reach 500,000 students in its first five years in Egypt.
The company also plays a significant role in developing Kafr El-Arbein, the village next to the Nestlé water factory in Egypt. They have cleaned the canal, paved roads and replaced their bridge among other things.
Cairo became the headquarters for the North East African Region in 2005, but Nestlé has been operating in Egypt for over 70 years.
“We are not a company that is here today, gone tomorrow; we are here for the long term,” Narayanan said.
Reuters reported that the company wants at least 40 to 45 percent of its business to come from markets like Brazil, China, Ghana and Vietnam within 10 years, up from about 30 percent now, Van Dijk said.
Nestle is planning to invest $1 billion in Africa over the next two years and open six new factories on the continent by 2012, including one in Algeria and another in the Democratic Republic of Congo. One factory is planned to open in Mozambique to take advantage of a Chinese-built railroad linking the country’s coast to Zambia, van Dijk told Reuters.
Nestle closed its Tunisian ice cream and cereal factory for about a week because of rioting in the country, but reopened it again on Tuesday morning, Reuters reported.
