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Nestlé sees huge gains in poor countries

The world's biggest food company Nestlé says it expects to generate more than half its sales in emerging markets, including India and China, by the end of the decade.

Published: 5 November 2012 19:05 CET

Nestlé sees huge gains in poor countries

The food giant's headquarters overlook Lake Geneva in Vevey (Photo: Nestlé)

The Switzerland-based giant said on Monday that developing markets currently contribute 40 percent of its global sales.

"Our expectation is that by the end of the decade that (figure) will reach 50 percent," Nandu Nandkishore, Nestle zone director for Asia, Oceania, Africa and Middle East told AFP in New Delhi.

Nandkishore was in the country ahead of the opening of Nestlé's first research and development centre in India, located in Manesar, a town close to Delhi.

Nestlé's India operations currently contribute just a fraction of the company's global sales but Nandkishore said he was upbeat about the country's long-term potential.

As India, a nation of 1.2 billion people, becomes an increasingly urban society, domestic demand for processed foods will grow, he said.

Nestlé's world headquarters are in Vevey, in the canton of Vaud.

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'Unlimited resources': Switzerland's Nestle goes vegan

Photo: SEBASTIEN BOZON / AFP

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.

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