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Nestle to spend $200 mln revamping South Africa factories

September 18, 2014
Consumer Packaged Goods
(Reuters) – Nestle will invest around $200 million expanding its coffee factory in South Africa and revamping other facilities producing consumer goods, the incoming head of the local unit said on Wednesday.
 
Ian Donald, who will take over as chairman and chief executive of the Vevey-based firm’s South African unit next month, said the increased capacity of the coffee factory would create an export hub for sub-Saharan Africa.
 
Nestle has nine factories in South Africa, making consumers goods like baby milk powder, coffee creamer and instant noodles.
 
Donald said the company was looking at setting up manufacturing plants in several other African countries, including Ethiopia and Mozambique. He declined to give details or a time frame for those investments.
 
Nestle, which makes about 4 percent of its sales in Africa, could “easily” push that up to 10 percent, Donald told Reuters, without giving details.
 
“We’re being realistic with sub-Saharan Africa. We realise that we going to have to walk before we run, so, we are still building businesses that should contribute significantly to group revenue in the future,” he said.
 
Africa has been in the spotlight for global consumer firms since Wal-Mart’s $2.4 billion acquisition in 2011 of South African retailer Massmart gave the world’s largest retailer a foothold in several sub-Saharan countries.
 
Companies want their products on the shelves of retailers such as Shoprite which have laid out aggressive plans for store openings across the continent of a billion people.
 
Shoprite – Africa’s largest retailer – and rivals Massmart and Pick n Pay have been slow to put their plans into action due to a lack of shopping malls in most of the continent.
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