Nestlé Phils spends P5.4B on expansion projects this yr

 By Marianne V. Go (The Philippine Star) Updated November 30, 2011 12:00 AM

Tagum, Davao , Philippines — Nestle Philippines, Inc. (NPI) spent P5.4 billion for its operations in the country this year, the bulk of which was spent for its P4.8 billion Tanauan, Batangas Coffee-mate manufacturing plant, according to NPI executive vice president and finance and control director Daniel Aellen.

In an interview at its experimental development facility here, Aellen said NPI is spending P4.8 billion for the construction of its new Coffee-mate manufacturing plant in Tanauan, Batangas, while around P600 million was spent on other machinery and capacity upgrade of its other existing plants in Cabuyao, Laguna; Pulilan, Bulacan and Cagayan de Oro plant.

The Coffee-mate manufacturing plant in Tanauan, which will have a production capacity of 80,000 tons, will be ready for commissioning by the middle of next year.

Last year, Aellen said, NPI’s capital expenditure amounted to around P4 billion which was spent for upgrades of its various plants.

For 2012, NPI is still drawing up its budget, Aellen said, adding that the company is generally upbeat about continued growth for the company.

NPI’s local production includes Nescafe, Bear Brand, formula milk brands such as Nan, Nido powdered milk, as well as Nestle ice cream and yogurt, and powdered milk beverages such as Chuckie.

According to Edith de Leon, head of corporate affairs of NPI, the Coffee-mate plant is just phase 1 of NPI’s expansion plans in the 27-hectare Batangas property.

However, de Leon refused to reveal at this time, NPI’s investment plans for the phase two development of its Batangas plant. All the production of the Tanauan, Batangas plant, she said, is for the domestic market.

The Philipines, De Leon said, is only second to the US in the consumption of the Coffee-mate coffee creamer.

Initially, the Tanauan manufacturing plant, De Leon said, would only produce the original Coffee-mate creamer. She said there are plans in the pipeline to produce flavored creamer varieties.

Meanwhile, NPI continues to help the local coffee industry grow and improve the quality of its coffee beans, specifically the Robusta variety in Mindanao.

Through its experimental and demonstration farm in Tagum, Davao del Norte, NPI is producing quality coffee seedling which coffee farmers can buy to start their own coffee nursery or farm.

According to De Leon, NPI is currently purchasing only 25 percent of its current coffee bean requirement from Filipino farmers because there is simply not enough local production.

As such, NPI still has to import up to 75 percent of its raw coffee bean requirement.

Annual local demand for coffee beans, De Leon said, is estimated by NPI at 64,000 metric tons.

NPI is hoping that with aggressive efforts to revive the Philippine coffee industry, it will be able to reverse its source of raw coffee bean, buying up to 75 percent of its requirement from Filipino coffee growers by 2020.

According to the Department of Agriculture, the local coffee industry registered a negative two percent growth in 2010 and a negative seven percent in the first three quarters of this year.

Optimistically, though, the DA is hoping to post a positive turnaround and growth of five percent next year with an assistance of P163 million for various coffee-related projects.

NESTLÉ WINS ARAW ADVERTISER OF THE YEAR AWARD

Celebrating its centennial year, Nestlé Philippines, Inc. (NPI) recently received the Philippine advertising industry’s top honors, the ARAW Advertiser of the Year Award, which is given to the participating company with the most number of wins across all categories of the competition.

Held every two years, the ARAW Awards, which recognize advertising creativity and effectiveness, are the most coveted in the country. Regarded by many as the “Oscars” or the “Cannes Awards” of local creative competitions, the 2011 Araw Awards served as the culminating event of the recently held 22nd Philippine Advertising Congress at the CWC Convention Center in Camarines Sur.

In winning the Grand Award as Advertiser of the Year, Nestlé Philippines harvested a total of five Gold, ten Silver and 13 Bronze ARAW Awards, including Brand Advertisement wins.

The performance of Nestlé Philippines was boosted by its Kasambuhay, Habambuhay Centennial Anthology of ten short films, as well as its Centennial TV commercial and brand advertising campaigns which have been praised by consumers and industry observers alike.

“We’re deeply honoured to be recognized by the advertising industry as the ‘Advertiser of the Year’ during our year-long celebration of the Centennial of Nestlé Philippines,” said NPI Director of Communications Sandra Puno, “and this recognition of the value of our work is likewise a recognition of the excellent work of our directors, various creative talents in the industry, and partner agencies, Zenith Optimedia and Publicis Manila.

”Ms. Puno stressed that the company’s advertising efforts are inspired by consumers and their families, and that Nestlé strives to uphold positive social values that are indispensable to nation-building.

“The award is a great honour for Nestlé Philippines. Our mission is to continue to nurture future generations of Filipino families and to contribute to the development of a strong and prosperous nation. This is a mission we have pursued in the last 100 years. Our advertising is dedicated to supporting the accomplishment of that mission,” Nestlé Philippines Chairman & CEO John Miller said.

LETTER TO THE EDITOR

Source: BusinessWorld (November 14, 2011)

The BusinessWorld edition of Oct.31, 2011 carried a report headlined "Nestlé officials accused of price fixing", which we would like to address with your kind permission.

The report, which was apparently based on a resolution by the Quezon City Prosecutor's Office dated Aug.15,2011, said: "A city prosecutor's office has found probable cause to charge Nestlé Philippines, Inc. officials with price fixing after distributors complained that the local arm of the food giant required their prodcuts to be sold for a dictated cost."

Apparently, the reporter was not aware that in a subsequent resolution on the same matter dated Oct. 5, 2011, the Quezon City Prosecutor's Office dismissed compalints against officers of Nestlé Philippines, Inc. (NPI) for alleged predatory pricing in violation of Article 186 of the Revised Penal Code. The complaints were filed by Service Edge Distribution, Inc. (SEDI) and FDI Forefront II Trading (FDI), both former distributors of NPI.

In its resolution of Oct.5, the Quezon City Prosecutor's Office reversed its earlier resolution approving the filing of charges in the Quezon City Regional Trial Court. Subsequently, the Quezon City Prosecutor's Office also filed a motion to withdraw from the Quezon City Regional Trial Court all relevant charges on predatory pricing in connection with the case.

The OCt.5 resolution states, "... a cursory reading of the complainant's allegations would readily show that there is no crime commited as the vertical price restraint practice is freely accepted in this jurisdiction as a tool for commerce."

Similar criminal cases filed by the same parties with the Makati and Quezon City Prosecutor's Offices, and an administrative case at the Department of Trade and Industry, have already been dismissed.

We hope that our letter will be useful in providing readers with updated information and correcting any misunderstanding which may have arisen from the report.


Sincerely,

RUSSEL ANDAYA
Senior Vice-President, Head of Legal
Nestlé Philippines, Inc.

NESTLÉ OFFICIALS VISIT D.T.I.

Source: Manila Bulletin

Department of Trade and Industry Undersecretaries Cristino L Panlilio (3rd from left) and Zenaida Cuison Maglaya (2nd from left) welcome Mr. Doreswamy Nandu Nandkishore (3rd from right) former Nestlé Philippines, Inc., Chairman and Chief Executive Officer during his visit to the Board of Investments on October 14, 2011. Mr. Nandu was named to succeed Mr.Frits van Dijk as Nestlé S.A. Executive Vice President and Zone Director for Asia, Oceania, Africa, and the Middle East. The Philippines is part of his regional market visit to get updates on Nestlé operations here and to meet with public and private sector leaders. Also in photo (from left) are Anthony Low Regional Manager for Zone Asia, Oceania, Africa, and Middle East; John Martin Miller, Chairman and Chief Executive Officer of Nestlé Philippines; and Ms.Editha de Leon, Senior Vice President, Head of Corporate Affairs.

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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