Tuesday, October 12, 2010

Nestle move prompts Cargill expansion

Nestlé S.A.’s move to produce non-dairy coffee creamer in the Philippines will lead to the expansion of one its major suppliers.

Cargill Philippines will build a plant for the production of glucose syrup adjacent to Nestle Philippines Inc.’s P4.35-billion non-dairy coffee creamer production facility at the First Philippine Industrial Park in Sto.Tomas, Batangas, according to Lucita P. Reyes, executive director of the Board of Investments (BOI).

Reyes, who recently met wit NPI president John Miller, said Cargill’s facility will have a pipeline going straight to the coffee creamer production.

Reyes said Cargill has a small operation in Quezon City where NPI sources a little of its glucose requirements. Bulk of its requirements is imported from Thailand and China.

According to its website, Cargill produces glucose syrup from corn starch. In order to meet customers’ various requirements, the products can be tailor-made for various applications including coffee whiteners.

Reyes said initially, NPI will process glucose syrup (made from corn or tapioca) and hydrogenated palm kernel oil (HPKO) to produce non-dairy coffee creamer.

It intends to eventually locally source glucose syrup from Cargill Philippines while HPKO will be sourced locally.

Nestlé Coffeemate has a commanding 89 to 90 percent in the coffee creamer.

The Philippines is the second biggest market for Coffeemate, after the United States.

NPI’s P4.35 billion project involves the construction of a "greenfield" factory on a 270,000-square meter land. The production of non-dairy coffee creamer is entirely different from its existing business operation in terms of final product and raw materials.

At present, the company imports all of its non-dairy coffee creamer requirements from Thailand.

As soon as the facility is operational, Nestlé will no longer import non-dairy coffee creamer since the Batangas factory will be able to supply the local requirements of Nestlé. Commercial operation is slated to begin in June 2012 involving a manpower requirement of 478 personnel.

Nestlé Philippines is a wholly-owned unit of Swiss-based Nestle S.A., a global food processing giant.
SOURCE: Business Insight (October 12, 2010)

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