Nestlé ramps up investment to meet rising demand

By Patricia Esteves (The Philippine Star) Updated October 24, 2011

MANILA, Philippines - Nestlé, the world’s leading nutrition, health and wellness company, is ramping up investment in Asia, Ocenia, Africa and Middle East (AOA) zone in its quest for future growth, its executive vice-president in charge of that region said.

In an interview with The Star, Nandu Nandkishore said he looks at the AOA zone as the engine of global economic growth because it represents 75 percent of the world’s population.

“Over the next 10 years, we see potentially one billion new consumers in this geography who will be entering a per capita income that will enable them to consume brands,” Nandkishore said.

“At the same time, in the same geography, we also see half a billion consumers who will be entering a sphere of affluence; they will be able to afford premium even luxury goods. There are huge consumer opportunities which needs to be addressed,” he added.

The AOA zone continues to be a significant market for Nestlé which produces brands like Nescafe, Milo, Nido, Bear Brand, Chuckie, Coffee-mate, Nestea, Nesvita, Maggi, Alpo, Purina and Kitkat.

Nandu cited a little bit of history, explaining that back in the 17th century, more than 50 percent of the world’s output came from the AOA zone.

“Some 300 years ago, China, India, Southeast Asia and Africa contribute more than 50 percent to the world’s output. But this has shrunk to maybe about 10 percent. But now, it’s coming back up as these people start to create more affluence. So this zone is definitely an area of the geography which we’re looking for in terms of growth,” he said.

“At the same time, Nestlé also wants to source more talent from this part of the world,” Nandkishore said.

Nandkishore replaced Frits van Dijk who retired last September after 41 years of service to Nestlé. Of Indian nationality, Nandkishore joined Nestlé in 1989 in India where, over the next seven years, assumed increasing responsibilities, mainly in marketing. In 2000, after a short stint at the International Headquarters in Vevey, Switzerland, he returned to Nestlé Indonesia where he was promoted to Market Head in March 2003.

In April 2005, Nandkishore became the market head of Nestlé Philippines. Four years after, in Oct. 2009, he returned to Vevey to take over the role of Global Business Head Infant Nutrition at Nestlé Nutrition.

Last year in September, Nandkishore was nominated as Deputy Executive Vice President in charge of Nestlé Nutrition. As the new Executive Vice President in charge of the AOA zone, Nandkishore will bring a wealth of solid business experience to the company and strong exceptional leadership skills in diverse circumstances.

“His excellent work in Nestlé Nutrition and his strong knowledge together with his great experience in Zone AOA, make him well prepared and qualified to take over this important responsibility,” Nestlé said in a statement announcing his appointment.


Phl a significant market

During the interview, Nandkishore stressed that the Philippines continues to be a significant market for Nestlé and is on target to meet the P100 billion revenue sales. Nestlé has just celebrated its 100th year in the country this year. Nestlé first made its presence in the country in 1911.

Its “billionaire brands” like Milo, Bear Brand, Nescafe and Nido have become icon of sorts in the country.

“The Philippines is a key market and we will continue to invest here,” Nandkishore said.

Last year, Nestlé Philippines racked up sales of P92 billion and in 2009 generated sales of P86 billion.

“The Philippines is one of our top 10 markets worldwide We are on track to get to a P100 billion sales from Nestlé in the Philippines this year which is quite impressive. We are continuing to invest in this economy. There is a direct investment in the form of a new factory we’re setting up in Tanauan to make coffee products and coffee creamer products,” Nandkishore said.

The Tanauan City plant, which will be operational by March 2012, is one of the major manufacturing facilities in the country which includes those in Cagayan de Oro, Cabuyao, Lipa and Pulilan.

Part of its investment program is to develop more coffee plantations and make the Philippines self-reliant on coffee again.

“There is an indirect employment that we create in the form of outreach with coffee farmers, so we have a huge program where we are going to put out two million seedlings every year to develop more coffee plantations,” he said.

“There was a time when the Philippines used to be self-reliant on coffee. Over the years, the local coffee growing industry in the Philippines actually declined. Now what we are trying to do is work once again with the farmers and the government and we have just signed an Memorandum of Agreement (MOU) with the government recently to start to drive once again the Philippines to be a major coffee producer,” Nandkishore said.

Other investments in the Philippines include the establishment of Nestlé business services, the company’s business process outsourcing (BPO) program, which was set up three and half years ago.

Today, Nandkishore said it is one of Nestlé’s most successful BPO centers worldwide.

“We employ 550 people there and we are definitely looking at this as a competent center to invest even more in the coming years,” Nandkishore said.

Nandkishore also unveiled plans to invest with Nestlé’s business partners in the value chain.

“We want to develop the farmers. We want to help develop the entire value chain in a way that creates shared value and we will continue to invest in the Filipino people. Eventually if you look at the philosophy of the way Nestlé does business, it’s all about sustainable value creations, the work sustainable is very important,” Nandkishore said.

Promoting Entrepreneurship in the country

WEDNESDAY, 05 OCTOBER 2011 20:46 JOHN MARTIN MILLER / THE VIEW FROM THE 19TH FLOOR

SOURCE: BUSINESSMIRROR, October 5, 2011

 

Thirty-five-year-old Cresante “Chris” Besas had been making a living driving his own tricycle for 13 years before he caught sight of a poster describing the Nestlé Business on Wheels (BOW) Program. He said he was intrigued by the simplicity of the requirements: “Able to read and write and able to drive a tricycle.” The question he had at that time was, “What kind of business could somebody with those very basic skills possibly have?”

Chris signed up for the BOW Program in January 2008 on borrowed capital. He started realizing the benefits of being a BOWer on his fourth month in the business, when his daily earnings started to exceed his earnings as a tricycle driver.

In a few more months, Chris had saved enough money to help his wife set up a small home-based carinderia.

Soon he was able to buy brand-new appliances to replace the run-down items he had previously bought from surplus shops. After almost one year in the BOW Program, Chris had saved some more to acquire a second unit of BOW, which he asked a cousin to operate.

Chris is one of 418 BOWers who now participate in the Nestlé BOW Program, which provides business opportunities to able-bodied people we call BOWers, who earn by selling Nestlé products to small canteens and carinderias.

The BOW Program is one of three sustainable sales-generating programs designed to open doors of livelihood opportunities to people who want to improve their lives, and all these in the course of doing business.

Our Micro-Distributor Program (MD) provides those who are at least high-school graduates with an opportunity to become small-scale entrepreneurs by selling Nestlé products to sari-sari stores in densely populated areas that cannot be covered by the existing Nestlé distributors’ truck operations. We now have 450 MDs.

Our Ice Cream Street Selling Program provides one livelihood opportunity, where commissioned street vendors ply the streets of residential subdivisions and other high-traffic public areas to sell Nestlé Ice Cream products. Today, we have nearly 2,000 Nestlé Ice Cream cariton vendors in both rural and urban areas.

In all three programs, Nestlé trains the vendors on the proper way of selling, product knowledge and the mechanics of the program they are in. They are equipped with Nestlé-branded cabs and uniforms, and assigned certain territories to tap and develop their accounts. They get their stocks from Nestlé distributors. On any regular day, these enterprising vendors earn a net income higher than the daily minimum wage, with the chance to earn more well within their capacity. BOW, MD and our Ice Cream Street Selling Program are three of the many ways we create shared value, which we at Nestlé define as making a positive difference in the lives of those around us in the course of doing business. Our factories have, likewise, launched Creating Shared Value (CSV) Programs in the communities where they operate, which have given birth to some thriving small businesses.

Our Cut-and-Sew Programs in Lipa, Cabuyao, Cagayan de Oro and Pulilan provide a cottage-industry type of enterprise where barangay residents make use of their sewing skills to supply the factory requirements for uniforms, laboratory gowns, hairnets, shoe covers and rags. Nestlé also creates shared value through our Agronomy Assistance Program, which helps coffee farmers improve both the quality and quantity of their harvest so they will have better income.

Coffee farmers are our fundamental partners in producing coffee products of the highest possible quality for Filipino consumers. At the center of this program is our Nestlé Experimental and Demonstration Farm in Tagum City, Davao, which provides coffee farmers access to new varieties of high-yielding, pest-resistant seedlings, as well as advanced coffee farming technical support and training. We are happy that in our own way, through our Agronomy Assistance Program, we continue to actively grow the coffee-farming industry in the country, encouraging more farmers to plant coffee and converting more lands to coffee farms.

Since the start of this year, around 1,500 hectares of farmland have been planted with new Robusta coffee seedlings and we continue to reach out to more communities all over the country to encourage them to go into coffee farming. As the Chinese proverb says, “Give a man fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime.” Opening doors to a better future via livelihood programs is at the very of core of CSV, which is a fundamental part of Nestlé’s DNA and the long-term global approach we take to everything we do. Here in the Philippines, CSV is integral to our mission of nurturing generations of Filipino families. As a board director of the European Chamber of Commerce of the Philippines (ECCP), I am happy to contribute Nestle’s BOW and CSV programs to ECCP’s advocacy of promoting entrepreneurship in the country and improving the lives of the Filipino people.



John Martin Miller is a board director of the European Chamber of Commerce of the Philippines and Nestlé Philippines’ Chairman and CEO. For comments or more information, e-mail info@eccp.com.

First half 2011: solid performance in a volatile environment

• Sales of CHF 41.0 billion, 7.5% organic growth, 4.8% real internal growth 
• Trading operating profit of CHF 6.2 billion, margin of 15.1%; +20 basis points, +40 basis points in constant currencies
• Consumer facing marketing spend up 6.2% in constant currencies
• Underlying earnings per share up 5.2% in constant currencies
• Strong Swiss franc: major impact on consolidation, little effect on operational performance
• Full-year outlook: organic growth at top end of 5% to 6% range, combined with a margin increase in constant currencies

Paul Bulcke, Nestlé CEO: “Nestlé continued to make good progress in a period characterised by political and economic instability, natural disasters, rising raw material prices and, yes, a strong Swiss franc. This has made for an extremely tough, volatile and competitive environment. But by leveraging our competitive advantages, investing behind our growth drivers and excelling in operational efficiency and effectiveness, we managed to drive growth not only in emerging markets but also in developed countries, especially in Europe. Furthermore we improved our trading operating margin while increasing investment in our brands. For the full year, we expect organic growth at the top end of the 5% to 6% range, combined with a margin increase in constant currencies.”

Vevey, 10 August 2011 – The Group reported organic growth of 7.5% and a trading operating profit margin of 15.1%, up 20 basis points reported, up 40 basis points in constant currencies, from that achieved by the continuing operations in the first half of 2010.

We continued to deliver growth both in emerging and developed markets, with organic growth of 5.7% in the Americas, 5.8% in Europe and 13.3% in Asia, Oceania and Africa. This performance reflects strong alignment and investment in our strategic growth priorities and brands to support our fast-flowing innovation pipeline. We also continued to step up our investment in R&D, factories and capabilities to support our growth in both emerging and developed markets.
 
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Broad vision catapults lit major to exec position

By: Abigail L. Ho
Philippine Daily Inquirer

Not all chief executives saw themselves at the helm of a company when they were but teenagers who were about to enter college. Nestlé Philippines Inc. chair and chief executive John Martin Miller certainly had no idea that he would be on the upper echelons at one of the world’s largest manufacturers of fast moving consumer goods.

An English literature and geography major from the University of Durham in England, all he had when he started his career in the 80s was a broad vision of what he wanted to do with his life.

“I did not see myself then as an executive. I had a broad vision of where I wanted to go. I’ve always wanted to work internationally, and that’s what I’m doing now. You shouldn’t have a too-specific idea of where you want to be, as that will restrict you,” he shares in an interview with SundayBiz.

Entering the world of business as a management trainee for a multinational company after earning his degree, he had no qualms about being unable to deliver what the job required of him, despite his lack of hard-core business know-how.

“I have no business qualifications, aside from my years of experience in business now. There weren’t that many business schools when I was growing up,” he relates. “But education is not so much what you study but how you study.”

Starting from the bottom

Although he did not take a business course in college, Miller did have some exposure to business—at least the manual labor side of it—when he was growing up.

His father was in the frozen food business and he helped re-arrange freezers from time to time. He also took on summer jobs during school breaks, the first one being as a shelver at a liquor store in England.

“I earned 33 pence (around P22.50, using present-day conversion rates) an hour, which wasn’t very much. It was a vacation job when I was a teenager,” he recalls. “I also worked in a silkscreen printing factory. That was before I started university.”

Today, after more than three decades of working for various companies, most of which were multinationals, he no longer had to do any heavy lifting, shelving, or freezer re-arranging. The challenges he had to face, however, were no less easier to deal with.

Adapting to diverse cultures

Aside from day-to-day job demands, Miller also had to learn to adapt to various cultures—most of which were as different from his own culture as night was from day.

He was first assigned to Asia in 1990 and had, since then, made the rounds of almost all countries in the region.

Prior to his posting here in the Philippines, he was chair and chief executive of Nestlé Indochina, where he held fort in Thailand, and was managing director of Nestlé Singapore Pte. Ltd. prior to that.

He also served as senior vice president for Danone’s biscuit business in Asia Pacific, a board member at Britannia Industries Ltd. in India, and senior vice president for Unilever Corp.’s personal care business in Africa, Middle East, and Turkey.

During his earlier days with Unilever, he held various senior management positions that got him assigned to the Czech Republic, Indonesia, Malaysia, the Slovak Republic, and the United Arab Emirates.

Even after all those years in Asia Pacific, he admits that he still has a few surprises when he came to work in the Philippines.

“I’ve been visiting the Philippines for more than 20 years, but this is my first time to work here. The Philippines is fascinating because it has so many latent characteristics. It’s a very stimulating country. It has a diverse culture—more than many other Asean countries that I’ve been to,” he relates.

It was mainly the people that set the country apart.

“In working with Filipinos, I’ve seen the passion of the people. The level of emotion, driven by passion and commitment, is extraordinary in the Philippines. That’s part of our success,” he says.

Philippine difference

Now on his third year in the country, Miller says he was still fascinated by the passion of the Filipinos, both those on the factory floors and those on the management side.

Working with such an able team—the best and the brightest in the industry—made his job so much easier, he says.

“During the recent visit of our CEO (Paul Bulcke), he was greatly impressed. He said I got the easiest job. The things I do here are fairly limited: I choose where to invest, I pick people to occupy certain positions, and I manage the external environment,” he relates. “We have an extremely able team. We attract the best and the brightest people, and that makes my job a lot easier. We’re a company of individual leaders, but we work as a seamless team.”

“As one of the many expats working here, we constantly learn about what works and what doesn’t work. We learn how to adapt. Here at Nestlé Philippines, I believe I learn more than I contribute,” he adds.

Apart from the people, he adds that another thing unique about his Philippine experience was the fact that no two days were ever completely alike.

“I don’t have a typical day. No two days are the same. Here, it’s not like in the West where we like being structured and we know how our days will go. Many things happen that you can’t predict. It’s a combination of knowing what you need to do and the things that just happen. That makes my job such an exciting one,” he says.

This made his work life so much more enjoyable—something that was particularly important, especially since there was no big division between his work life and personal life.

During days when he could get some non-work-related things done, he relates that he favored reading biographies, fiction, and business books, as well as running marathons. The last marathon he ran, however, was 10 years ago when his daughter Sophie was born.


Despite his hectic work schedule, he says he always had time for his family. Many times, his Malaysian wife Ying was also involved with the company, working with the wives of the other executives.

“We’re a tight-knit family (at Nestlé Philippines). I know that family’s very important in the Philippines,” he says. “In Nestlé, we involve everybody. We’re a family company.”

Looking forward to the next 100 years

By: Abigail L. Ho
Philippine Daily Inquirer

Its origins may be Swiss and its current head honcho may be British, but Nestle Philippines Inc. is as Filipino as a local company can get.
 
In a recent interview, Nestle Philippines chair and chief executive John Martin Miller shares how the company has survived 100 years of doing business in the country, and how much it is looking forward to spending another 100 years, or more, here.
 
“We believe very strongly in the Philippines. It has a good talent pool and a lot of resources. It’s a good market for (fast moving consumer goods). We have what we call key markets, and the Philippines is one of them,” he says.
 
As proof of its commitment to the country, the company has invested a fresh P4.8 billion to put up a coffee creamer manufacturing facility in Tanauan, Batangas, which will enable Nestle Philippines to source all of its Coffee Mate locally instead of importing from Thailand.
 
“Our vision for the new P4.8-billion coffee creamer facility is to make it one of the most important manufacturing sites in the world. We have a total of more than 500 worldwide,” he relates.
 
“We have room to expand. We’re hoping to put a new coffee plant on that site, where we can make coffee mixes. Those are very popular here in the Philippines,” he adds.
 
In the coming years, he says Nestle hopes to “re-energize the agriculture sector, especially coffee, which is the second largest market we compete in.”
 
Investments will be made in “knowledge transfer,” where Nestle Philippines will provide coffee farmers with seedlings for the “ideal crop,” to encourage them to go back to coffee farming, he says.


Good people, supportive gov’t

 John Martin Miller

Expanding its business in the Philippines is just one way of giving back to the country that has nurtured it and has provided it with a wide base of loyal customers over the past 100 years.

Miller attributes much of the company’s success to the Filipinos working at Nestle Philippines’ four plants in Lipa, Pulilan, Cabuyao, and Cagayan de Oro, as well as its predominantly Filipino management team.

“As a business, we’re the masters of our destiny. Our success here is a result of the hard work of our people here,” he relates.

Apart from the people, government support has also been instrumental to the company’s success in the country, he adds. Being a 100-year-old company, Nestle Philippines has gone through almost all presidents in the country’s history. So far, government policies have been fair enough and good enough to prompt the constant flow of investments into the country.

The Aquino administration’s firm stance against corruption and its crusade against poverty will serve as further impetus to continue Nestle’s growth in the Philippines.

“We’re very encouraged by the policies of the new government. We’re seeing all of the things that we’d like to see. This government has a strong emphasis on poverty alleviation, on fighting corruption. The business community applauds these efforts. The (public-private partnership) program is also there to upgrade infrastructure,” he relates. “We understand that these things don’t happen overnight. The direction (that the government is taking now) is very encouraging.”

“We welcome greater transparency. As a global company, we uphold good corporate governance. We want to see more of that. We want to see corruption stamped out,” he adds.

Investment-friendly environment

Nestlé Tanauan Factory

Even with past administrations, he says Nestle has always viewed the Philippines as a country that offers an environment conducive for doing business. It is a wonder not more companies are investing here.

“The Philippines has an investment-friendly environment. Why don’t more people invest here?” he says. “I’ve worked in other countries more volatile than the Philippines. The problem is more of perception. A lot of what is happening now—for example, corruption —is not unique to the Philippines,” he relates.

He relates that this year, as Nestle celebrates its 100th year in the country, it is a good time to reflect on how the company has gone through numerous peaks and valleys here, as well as what it has achieved in terms of its business and also in terms of its contribution to Philippine society.

As one of the largest producers of such staples as milk and coffee, he says Nestle has become more than a brand for many Filipinos. For the company’s loyal consumers, Nestle has become a way of life.

“It’s an auspicious time for us to be in the company, as we can reflect on past achievements. We’re one of the larger (fast moving consumer goods) businesses in the Philippines, but it’s not just about the size, but about our contribution to society,” he explains.

“We’ve increased nutrition health awareness, we’ve helped in nation building, and we’re one of the larger taxpayers in the country. Over the past 100 years, we’ve provided shared value, providing returns to our shareholders and relevant contributions to our stakeholders,” he adds.

 Nestlé Center

Moving forward to the next 100 years, he says Nestle is prepared to make more investments in the Philippines—not just to grow its revenue base but also to provide Filipinos with products that can improve their health and their lives.

“Our 100th anniversary is a good time for us to reflect on these things and the future. It’s not just about what we’ve done in the past, but how we can continue to nourish future generations,” he says.

Nestlé to continue expansion in PH

By: Abigail L. Ho
Philippine Daily Inquirer


Consumer goods giant Nestlé Philippines Inc. will be investing more in the country in the coming years, in a bid to offer new products to more markets, particularly consumers on the extreme top and bottom of the economic pyramid.

In an interview with the Inquirer on Thursday, Nestlé Philippines chairman and chief executive John Martin Miller said the company, while already serving a wide spectrum of Filipino consumers, still had markets that were largely untapped.

“We’re looking for growth in many areas. Other business opportunities are being explored. We’re serving most of the consumers in the middle, or the C and D classes, but there’s a population on the top and bottom of the pyramid that we also hope to serve,” he said.

He said Swiss parent firm Nestlé SA remained committed to the Philippines, particularly as the country was considered one of the firm’s key markets.

“We’re bullish about the Philippines. There are a lot of opportunities for growth. We’re optimistic about our prospects,” he said. “We want to raise the level of our investments in the Philippines. This has been fully endorsed by our shareholders.”

One particular focus would be the coffee sector, he said, from which Nestlé Philippines was getting about a third of the raw materials for its second-biggest-selling brand, Nescafe. The bulk of its coffee supply came from Vietnam and Indonesia.

Moving forward, he said the company hoped to source up to 70 percent of its coffee requirements from local farmers.

“We want to breathe new life into the coffee-growing sector. During his recent visit here, (Nestlé SA chief operating officer Paul Bulcke) stressed our commitment to providing employment in the countryside. We want to encourage people to go back to agriculture, especially coffee farming,” he said.

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