Nestle region chief confident on outlook for southern Africa

Nestle region chief confident on outlook for southern Africa

Nestle will spend US$10m expanding its operations in southern Africa - a region that includes Zimbabwe, Zambia and Malawi - this year.

Between 2011 and 2013, the Swiss company invested $20m in the region, where it manufactures and distributes powdered milk and breakfast cereals.

Nestle enjoys a dominant position in these sectors, Nestle Zimbabwe executive director Farai Munetsi told just-food.

Cerevita breakfast cereals are popular in Zimbabwe, Munetsi said. Solid milk products under the Cremora and Nido brands, as well as the Ricoffy roasted coffee brand, are are also witnessing strong demand in the subregion.

This year's capital expenditure will be spent on upgrading its factory equipment, Munetsi revealed.

"The major capital expenditure for 2014 will be the upgrading of the milk powder drying plant to operational efficiencies. The project is estimated to cost close to $10m," said Munetsi.

Independent Zimbabwe-based economist Moses Moyo warned "tough economic conditions... could exert pressure on spending power and prospects for further growth" in volumes.

However, Munetsi brushed off such concerns. Nestle's investments mean the company is strategically positioned to rise above current challenges, Munetsi said.

"The company is confident of meeting its revenue targets despite the tough macro-economic environment. This is mostly due to the increase in capacity and operating efficiencies after the investments," Munetsi said.

Nestle said key raw materials which include milk, maize, flour, wheat and sugar were locally produced. It supplements these with imports from its neighbouring countries such as Zambia and South Africa.