Nestle China sees faster growth

Nestle China sees faster growth

Nestle is driving revenue growth ahead of the market in China, where sales gains have accelerated this year, Nestle regional chief Roland Decorvet has indicated.

The company inaugurated two factories in the country last week (10-11 July). Nestle invested CNY880m (US$144m) to open a Nescafe coffee factory in the city of Laixi, Shandong. In partnership with Yinlu Foods, in which Neslte holds a 60% stake, the group also opened a CNY2.1bn dairy plant located in Chuzhou, Anhui.

During a press conference in Chuzhou, Nestle emphasised that capacity expansion underpins the company's market-beating sales growth in the region.

Nestle currently operates 33 factories in Greater China. The group generated CHF5.2bn (US$5.5bn) in sales in the country during 2012 and, according to Decorvet, revenue gains are gathering pace.

"We are growing even faster than last year and we are gaining market share big time," Decorvet told journalists.

Indeed, Nestle announced last week that China has gone from being its third to its second-largest market by sales, behind the US. Speaking to just-food on the sidelines of the event, Decorvet said that increasing the proportion of sales Nestle generated in China "was an objective" for the Swiss food group.

"Number two was an objective in order to motivate people, because of the size of China, because of the categories or acquisitions," he explained.

Looking to the future, Decorvet added that Nestle is not specifically aiming for China to eclipse the US as its largest market.

However, he added: "Will it happen one day? Potentially, yes. What we need to do is out grow the market, keep growing market share [and] develop potentially new categories."

Nestle generated sales of CHF23.7bn in the US during 2012. While America currently dwarfs Nestle's other markets, the company has nevertheless witnessed a softening of sales in the country.

Nestle does not provide a country-by-country breakdown of revenues, but organic growth in the group's Americas region of 5.2% is outpaced by organic growth of 8.4% in the Asia, Oceania and Africa region.

In China, Nestle saw "double digit" growth during 2012 and Nestle's presence in the country has been boosted by M&A, including the formation of two significant joint venture agreements - with Yinlu and confectioner Hsu Fu Chi - and the acquisition of Pfyzer's global infant nutrition business last year.

just-food caught up with Nestle group CEO Paul Bulcke to find out more about the company's target to deliver "sustainable growth" across all its markets. Click here to view our coverage. Alternately, click here to access last month's two-part interview with Decorvet.