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Monday, 26 July 2010 08:53

Nestle to Invest U.S.$138 Million in New Plants

By Scola Kamau

NAIROBI, Kenya, July 25, 2010, (East African) — The Swiss food giant Nestle has announced that it will invest $138.32 million in East, Central and Southern Africa over the next three years to enhance its competitiveness in the food industry.

 

The firm wants to increase the proportion of sales in emerging markets from the present 35 per cent to 45 per cent over the next 10 years.

 

"With 400 million people and an emerging middle-class and ever-rising purchasing power, this region has major potential for Nestlé products," said Nestlé CEO Paul Bulcke.

The investment will see up to 30 million Swiss Francs ($27.66 million) go toward doubling production capacity in its Nairobi factory, which will supply the East African region, Malawi, Zambia, and the Democratic Republic of Congo.

 

A similar amount will be spent on building a new factory in Mozambique to meet rising demand for beverage products in the country and its neighbours, especially coffee. The decision to inject more funds in Kenya comes against the backdrop of other multinational manufacturers pulling their production activities out of the country.

 

Nestle directly employs 750 people in the region and plans to double the figure by 2012. The consumer goods sector has undergone significant changes regionally.

 

Colgate Palmolive and Unilever have closed down their factories in Kenya and relocated most of their manufacturing plants to other countries like Egypt, citing the high cost of doing business. Other consumer goods manufacturers who have left include Procter & Gamble, Johnson & Johnson and Reckitt & Benkiser.

 

The largest share, $36.88 million will be used to set up a factory to process dairy, coffee, and other beverages in the Democratic Republic of Congo.

 

Harare's factory has been allocated $23.36 million for expansion and it will in turn supply the Zambia and Mozambique markets. The company is also set to build new factories in Angola and Mozambique and open 13 new distribution facilities in the region.

 

It is focusing on local partnerships to penetrate the local market and distribution networks. In Kenya, Uganda and Rwanda, Nestlé has signed a partnership with the East African Dairy Development Board.

 

In Uganda and Tanzania, it has partnered with the Uganda Coffee Development Authority and the Tanzania Coffee Research Institute in enhancing productivity of the coffee sectors in the two countries.

 

Mr Bulcke said the East African Common Market launched on July 1 will aid Nestle's business expansion. "As business grows, we will seek to open firms in other East African countries."

Additional reporting by Winfred Kagwe.

 

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