Nestle expands in Egypt with e-commerce deal

Nestle expands in Egypt with e-commerce deal

Nestle has become the first FMCG company to sell food and drink products in Egypt via the Arab world's largest online retailer, Souq.com.

The partnership will enable Nestle to tap into the burgeoning Egyptian e-commerce market, the company said. 

Online shopping in Egypt represents US$1.7bn of total retail sales and groceries account for 3% of that total, with a report by Payfort predicting this will double by 2020. Egyptian households currently spend over 35% of their income on groceries and an increasing proportion of this spend could move online. 

While Internet grocery shopping is in its infancy in the region, it is also a receptive market. According to a recent Nielsen survey, 55% of people in the market say they would be willing to buy their groceries online.

With the highest concentration of Egyptian online shoppers based in the big cities of Cairo, Giza and Alexandria, Nestle says the only potential barrier to growth are a relatively low penetration of credit cards, and also trust issues with online payments and transactions.

The partnership between the FMCG giant and Souq.com will also mean that Nestle's flagship brands such as Nescafe and Maggi will reach a wider range of Egyptian consumers than ever, the Swiss food giant believes. 

While Nestle already has partnerships with other online retailers such as Knockmart.com and Goodsmart, the deal with Souq.com, the leader in its field, increases the group's participation in this area.

The joint venture has seen Souq.com develop a dedicated food and beverages section on its website, making it the first large online retailer in Egypt to operate in this category.

"Accelerating e-commerce presence and sales for Nestle brands is a top priority for us and we are very excited to start a partnership with a leading online retailer like Souq.com which will greatly expand our e-commerce presence enabling our products to reach all Egyptians anywhere in the country with only a few clicks," said Mohamed Abo El Fotouh, consumer communications and e-business manager for Nestle's operations in north-east Africa.

"E-commerce is a fast-growing channel in Egypt and with the support of strategic partners like Souq.com we are confident to succeed."

Omar Elsahy, the general manager of Souq.com in Egypt, was equally enthusiastic about the new venture. "We are excited to be tapping new grounds in the FMCG sector at souq.com," he said.

"FMCG spending continues to dominate the household budgets, accounting for a forecast 35.6% of the total expenditure in 2016. We believe establishing a strategic partnership with Nestle Egypt will have a great effect in further building the space online. This will allow Souq.com to further expand assortment and hence further expand value offerings to the Egyptian consumer."